You're reading: Investors get election tension

Leading Ukrainian shares slipped 0.35 percent this week as investor jitters mounted ahead of the Oct. 31 presidential election, dealers said. They predicting the market would drop further closer to the ballot.

The PFTS benchmark index closed at 28.64 on Oct. 19 compared to 28.74 the previous trading period.

Trade volumes on the PFTS market, which includes trade in treasury bills and promissory notes as well as shares, fell to Hr 26.306 compared to Hr 28.349 million during the previous trading period.

'The market is weak, the trend is down – but that is what everybody expects before the election,' Denis Matsuev, a dealer at Sokrat brokers, said. 'Foreign funds are not buying anything and domestic investors are purchasing only in small lots.'

Dealers noted weak demand for shares in oil and gas company Ukrnafta, and put that down to worries over whether the firm will manage to pay out in November the dividends it promised to shareholders.

'The stocks market is indeed weak, but there was increased trading activity in the metallurgy sector over the last few weeks,' Ihor Maslyuk of Alfa-Capital told the Post. 'This especially concerns Mariupol Plant, Azovstal and the Mykolayiv Alumina Plant.' Oblenergos also proved a popular buy.

Meanwhile, dealers expect the market to remain – if not comatose – in a deep sleep until the election and possibly beyond.

'After the elections the situation might not get any better. But at least investors will have a clear picture and will know what to expect,' Maslyuk said.
Bonds

The National Bank of Ukraine had bought Hr 200 million worth of OVDPs from the Finance Ministry to help finance payments on Ukraine's external debt, Natalia Hrebenyk, director of the NBU Monetary Policy Department, told news agency Ukrainian News on Oct. 15.

Hrebenyk did not specify to which creditors the payment will be made. No comments were available from the Finance Ministry.

The Finance Ministry sold the OVDPs to the NBU on Sept. 13 and 14.

Because of the shortage of budget funds this year, the Finance Ministry has frequently financed payments on the country's external debt by selling government bonds to the NBU for hryvna and then using the hryvna to buy foreign currency from the NBU.

'The situation is pretty clear,' an NBU advisor told the Post. 'The NBU credits the Ministry of Finance and gets bonds. The Ministry, in its turn, gets ready money.'

The Finance Ministry has sold Hr 3.701 billion worth of its OVDP treasury bills since the start of this year. Most of the OVDPs were bought by the NBU.

Next week: How the result of the presidential election could affect the Ukrainian stock market.