The European Bank for Reconstruction and Development (EBRD) plans to close 2022 with investments in Ukraine of over EUR 1.5 billion, Matteo Patrone, EBRD Managing Director for Eastern Europe and the Caucasus, said at the Ukrainian Investment Roadshow conference last week in London.
Next year the EBRD is going to do as much, if not more, depending on how the situation develops, he said.
Patrone said that the EBRD typically invests around EUR 10-11 billion a year in its countries of operations, so the amount allocated to Ukraine shows its role for the bank.
The Managing Director explained that the EBRD is able to provide such significant funds because it takes part of the risk on its balance sheet, while donors cover the rest.
Patrone said that while this year a significant portion of funding went to support liquidity, next year, according to his forecasts, the share of investment funding will increase – not only for recovery, but also for new projects.
He, in particular, recalled the allocated funds for the new direct investment fund Horizon Capital and announced the project of a Polish investor being considered by the bank, which is already present in Ukraine and who wants to invest another EUR 40 million in the country.
Speaking about work in the near future, Patrone called for more focus not on the 10-year outlook, but on what will happen in the next 12-18 months, how to win the war on the economic front during this period.
According to him, the second important point is the coordination of Ukraine’s international partners, building an effective and efficient coordination platform for channeling funds to support the country with the participation of Ukraine.
And the third question worth mentioning is that not to lose focus on the reform agenda, both in the short and medium term, he said. Therefore, reforms, in particular, reforms in corporate governance, the rule of law, which have been discussed for the past six to eight years and where Ukraine has made significant progress, should remain in the spotlight, the EBRD Managing Director for Eastern Europe and the Caucasus said.
As reported, in 2021 the EBRD invested EUR 1 billion in Ukraine.
Stock indices of major Asia-Pacific countries are mainly down in trading on Monday except Japan Indicator amid a decline of Wall Street last week due to concerns about further interest rate hikes in the United States.
Investors fear that multiple key rate hikes by the U.S. Federal Reserve (Fed) and central banks in Asia and Europe to combat high inflation could push the global economy into recession, Trading Economics wrote.
By 8:17 Moscow time the value of Japanese index Nikkei 225 increased by 0.02%.
The most significant rise among the components of the indicator was demonstrated by share prices of beer producer Sapporo Holdings Ltd. (+2.9%), chemical company Teijin Ltd. (+2.8%) and insurer Tokio Marine Holdings Inc. (+2.3%).
By 8:21 Moscow time, China’s Shanghai Composite Index was down 0.7 percent and Hong Kong’s Hang Seng was down 2.1 percent.
The People’s Bank of China (NBK, the country’s central bank) kept its benchmark one-year lending rate (LPR) at 3.65% per year.
The rate for five-year loans was left at 4.3 percent per annum, the NBK said in a statement.
The regulator left the rates unchanged amid continued downward pressure on the yuan and a slowdown in economic activity amid rising coronavirus infections and new restrictions or lockdowns in a number of cities, Trading Economics wrote.
In Hong Kong, stocks of companies providing consumer goods and services declined significantly on Monday as investors’ attention shifted back to the coronavirus situation amid a rise in infections and the first report of a fatality from the effects of COVID-19 in nearly six months, Trading Economics wrote.
Hong Kong Chief Executive John Lee tested positive for COVID-19 after returning from the Asia-Pacific Economic Cooperation (APEC) summit in Thailand, the PRC Special Administrative Region government said.
According to the statement, Lee tested negative for COVID-19 all four days he was in Thailand. However, upon his arrival at Hong Kong airport, the head of the special administrative region’s administration received a positive test.
Leaders of the decline on the Hong Kong Stock Exchange include shares of restaurant chain owner Haidilao International Holding Ltd (-7.5%) and casino operators Sands China (SPB: 1928) Ltd (-7.4%) and Galaxy Entertainment Group Ltd (-7.3%).
The value of South Korea’s Kospi index by 8:15 Moscow timeframe dropped 1.3%.
One of the world’s largest chip and electronics maker Samsung Electronics Co. dropped 1.5%, while car maker Kia Corp. dropped 1.7%.
Australia’s S&P/ASX 200 index fell 0.17%.
Share prices of the world’s largest mining companies BHP and Rio Tinto fell by 2.25% and 2.3%, respectively.
Ukraine has started the preparatory procedure for holding a tender for lithium ore extraction at the Dobra site under production sharing agreements (PSA), the Ministry of Energy said on Monday.
“Processing of the issue of implementation of projects on prospecting, extraction and enrichment of rare-metal minerals, in particular at the Dobra site (Kirovograd region), on PSA terms is provided by the decision of the CNSDU “On stimulation of prospecting, extraction and enrichment of minerals, which are strategically important for sustainable development of the economy and defense capabilities of the state,” the ministry said on its website.
According to the Ministry of Energy, the decision to begin the preparatory procedure for the tender for exploration, mining and processing of lithium ore in the Dobra area under the PSA was taken at a meeting of the interdepartmental commission on the organization of the conclusion and implementation of production sharing agreements back on February 1, 2022.
“It was decided to create a working group, which will prepare the terms of reference and recommendations on the tender conditions. The interdepartmental commission after agreeing the terms of reference and recommendations will submit them to the Cabinet of Ministers for approval and announcement of a transparent tender for the specified site”, – the department informed.
Currently, there are two deposits of lithium ores in Ukraine – Polokhivske and Shevchenko – and two sites – Dobra and Krutaya Balka.
Oil prices are declining Monday morning after a sharp decline over the past week caused by concerns about the Chinese economy.
The cost of January futures for Brent at London’s ICE Futures Exchange stood at $86.65 a barrel by 7:06 a.m., down $0.97 (1.11%) from the close of the previous session. Those contracts fell by $2.16 (2.4%) to $87.62 per barrel at the close of trading last Friday.
The price of WTI futures for January at the electronic trading on the New York Mercantile Exchange (NYMEX) is $79.34 per barrel by that time, down $0.77 (0.96%) from the previous session. The contract fell by $1.56 (1.9%) to $80.08 per barrel at the end of last session.
Brent dropped 8.7 percent and WTI dropped 10 percent at the end of last week. Both contracts finished the trading at their lowest since the end of September.
The main negative factor for oil quotations last week was the concerns about demand for fuel, especially in China.
China’s State Council warned of the risks of “irresponsible weakening” of countermeasures against the coronavirus, the South China Morning Post reported. In the past two weeks, the number of new cases of COVID-19 infection recorded daily in China has increased sevenfold, the WSJ wrote.
Traders are also trying to estimate how much crude will leave the market after the European embargo on Russian oil went into effect Dec. 5.
“No doubt the market will keep an eye on oil supply data from OPEC+ countries in the coming weeks, as it remains unclear how much production will actually decline after the announced 2 million bpd cut,” wrote Barbara Lambrecht of Commerzbank.
Meanwhile, the number of active oil rigs in the USA last week increased by 1 unit to 623, oil services company Baker Hughes reported. The index rose for the third week in a row.
The dollar is rising strongly against the euro and the pound sterling and moderately more expensive against the yen, thanks to increased demand for protective assets and hawkish statements from Fed chiefs.
The ICE-calculated index showing the dynamics of the US dollar against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona) is up 0.4%, while the broader WSJ Dollar Index is up 0.34%.
The euro/dollar pair is trading at $1.0284 by 7:35 a.m., versus $1.0326 at the close of last Friday’s session; the euro is losing about 0.4%.
The dollar/yen is up 0.1% at 140.47 yen, up from 140.39 yen at the end of last session.
The pound is getting cheaper by 0.5% and is trading at $1.1829 versus $1.1888 the day before.
Federal Reserve Bank of St. Louis Governor James Ballard said last week that the Fed would have to keep raising the benchmark interest rate. At the same time, the charts accompanying his remarks showed that its level could reach 5-7% per year.
Meanwhile, Boston Fed Chair Susan Collins said Friday that the Fed could consider various options for changing the interest rate at its December meeting, including a 75 basis point hike.
The Fed has raised the rate by 75 bps at its last four meetings, and now analysts and economists generally expect the next hike to be 50 bps.
The Fed will hold its next meeting on December 13-14.
The dollar is also supported by demand for safe haven assets amid fears over the spread of the coronavirus in China and actions by authorities to contain the pandemic, writes Trading Economics.
