You're reading: Shares boosted by Kuchma win

Leading Ukrainian shares jumped nearly 9 percent in the latest trading period, buoyed by the re-election of President Leonid Kuchma and a significant price rise in the Ukrainian blue chips. Moreover, traders predicted a further revival and more growth in trading volumes.

'We feel the outcome of the presidential election stimulates the market, and I expect that the growth will continue,' said Oleksandr Vershyhora, an analyst at the Sokrat brokerage.

The PFTS benchmark index closed at 35.50 on Nov. 23, compared to 32.44 at the end of the previous trading period.

Trading volumes, which include transactions with treasury bills and promissory notes as well as shares, totaled Hr 23.316 million compared with Hr 11.231 million for the previous trading period.

Dealers said that apart from local traders, some foreign investors had showed interest in Ukrainian securities this week.

'I hope foreign investors will return to Ukraine seeing these election results,' one dealer said. 'They are already showing their interest.'

Apart from the election of a reputedly pro-market president, the PFTS index was boosted by surges in quotes in lucrative companies such as Ukrnafta and Stirol.

'Remember that the index simply reflects market capitalization,' said PFTS official Dasha Myshyna. 'Ukrnafta, a company with the biggest capitalization on the Ukrainian stock market, did more than well this month.'

Ukrnafta shares were changing hands for Hr 6 at the end of October, and its share price had risen to Hr 7.4 on Nov. 22, with dealers predicting further rises.

The sudden rise in Ukrnafta quotes is connected with the fact that the State Property Fund has announced that it will put several Ukrnafta stakes up for sale via PFTS auctions, one market analyst said.

The analyst said some traders are deliberately forcing up Ukrnafta's share price so that the stakes will be difficult to sell at auction. Under current Ukrainian legislation, the SPF will have to base its starting price on the latest available stock quote for Ukrnafta, and may reduce the starting price by no more than 10 percent.

But even if the SPF reduces the starting price for the Ukrnafta shares by 10 percent, the stakes will still prove unattractive to investors, the analyst said, adding that the auctions would probably fail. The analyst speculated that the artificial inflation of Ukrnafta's share price was a ploy by some shareholders to retain control of the company by preventing further stakes in Ukrnafta from being sold.
PFTS News

The SPF on Nov. 19 held a PFTS auction to sell two stakes – a 3.02 percent in Mykolaivoblenergo, and a 3.92 percent in Lvivoblenergo. The starting price for Lvivoblenergo shares was Hr 0.93, and for Mykolaivoblenergo shares Hr 0.44. The minimum sale price for Mykolaivoblenergo shares was Hr 0.53, while the maximum was Hr 0.67. In total, 4,792,047 Mykolaivoblenergo shares were sold.

The SPF failed to sell the Lvivoblenergo stake, which will be put up for sale on Nov. 26 with its starting price reduced to Hr 0.84 per share. A stake in Kyivmetrobud will also be put up for sale in a PFTS auction on Nov. 26.

French bank Credit Lyonnais is currently undergoing the process of connection to PFTS Technical Center, according to PFTS officials. Prior to this, the bank was a member of the PFTS Association but didn't take part in trading. Credit Lyonnais' decision to gain trading capability is another sign of foreign financial institutions' renewed interest in the stock market, PFTS officials said.

Next week Money Man will profile The Ukrainian Finance Server, said to be the best Ukrainian Website on finance, banking and stocks.