Non-resident individuals will be able to buy Ukrainian government bonds with maturities from three months to three years on the online government bond trading platform ICU Trade, ICU Financial Group has announced.
“At present, non-residents can register remotely with a broker and buy and sell domestic government bonds in the same way as Ukrainian citizens do now,” the group said in a press release on Monday.
It is specified that residents of Russia and Belarus will be denied access to the service.
“The purchase and storage of securities is free of charge. Yields for non-residents will be the same as for domestic clients. There are no income taxes on government bonds in Ukraine,” the statement said.
The company clarified to Interfax-Ukraine that non-residents already have the opportunity to repatriate foreign currency funds invested in government bonds.
ICU recalled that numerous requests from foreign citizens to buy Ukrainian government bonds began to arrive after the launch of trading at the beginning of the full-scale invasion.
According to the company, at that time there was no such opportunity in Ukraine due to the lack of the regulatory framework and technical solutions necessary for these operations, which have been found today thanks to the joint work of market participants.
“We consider this project to be a volunteer project. It is costly and we do not make money on it, but we consider it fundamentally important to help the country. We are grateful to the NBU, the NSSMC, and the Ministry of Finance of Ukraine for their joint efforts, which made it possible to provide such services to foreign investors at the technological and regulatory level,” the company said in a press release.
According to the ICU, there is already a small queue of citizens of the United States, Israel, Poland, Germany, the United Kingdom, Australia, and Canada who want to buy Ukrainian bonds.
“These are both representatives of the diasporas and foreigners not connected with Ukraine who share the values of our country. We will work to increase the number of such investors in Ukraine,” emphasized Konstantin Stetsenko, co-founder of ICU Group.
The company noted that the registration of investors from some countries may take longer due to differences in the legal framework and the peculiarities of the work of mobile operators in different countries, and therefore asked to “treat such cases with understanding” and said that it would help each client to formalize everything properly.
ICU Group is an independent financial group that provides brokerage, asset management and private equity services. The group is also engaged in venture capital and fintech investments. ICU focuses on emerging markets around the world. The group manages assets of more than $500 million. According to the group, it has been the largest broker of government bonds in Ukraine for more than 15 years.
ICU is co-owned by Makar Paseniuk and Konstantin Stetsenko.
According to the NBU, as of September 18, non-resident legal entities held UAH 47.85 billion worth of government bonds, while resident individuals held UAH 46.14 billion, with a total volume of government bonds in circulation of UAH 1 trillion 266.65 billion.
China’s housing market is heading for a new crisis that could be the country’s worst yet, The Wall Street Journal writes.
The bankruptcy of a major real estate developer, China Evergrande Group, two years ago triggered a wave of developer defaults, and the industry’s problems have had a negative impact on the Chinese economy as a whole.
Now, China’s largest private developer, Country Garden Holdings, is in a difficult position. Unlike Evergrande, whose problems were caused by excessive wastefulness, Country Garden’s difficulties are related to the withdrawal of investors and buyers from the real estate market.
The situation with Country Garden could pose much more serious problems for the Chinese economy than Evergrande’s default in 2021, the WSJ notes. Much of Country Garden’s operations are concentrated in industrial zones that have been the engine of growth for the Chinese economy in the best of times. Now, these regions are experiencing financial difficulties and facing an outflow of residents, making it likely to be difficult for them to cope with the collapse of a major developer.
Economists expect that the problems in the residential real estate market will have a negative impact on consumer confidence, which will prolong the decline in activity in the sector. Real estate and related industries account for about a quarter of China’s GDP.
“The whole industry is in trouble,” said Kenneth Rogoff, a Harvard University economics professor. Small and medium-sized cities are experiencing particularly serious problems.
Construction volumes have been exceeding demand for several years, leading to a huge oversupply of housing, and the market needs to be adjusted, Rogoff said.
“How do you prevent the Chinese population from panicking when they see that a significant part of their wealth could collapse? It’s not easy,” the expert says.
As of June 30, Country Garden was involved in more than 3 thousand projects involving millions of homes. The company’s total liabilities, including sold but not delivered homes, debts to suppliers and banks, as well as bonds, are estimated at $186 billion, with the bulk of them due within a year.
The developer recorded a record loss of about $7 billion in the first half of the year, writing down the value of a number of assets.
Last month, Country Garden missed interest payments worth $22.5 million on two issues of dollar-denominated bonds, but managed to find the funds to make them during a 30-day grace period, avoiding default. Chinese lenders have granted the company a grace period for repayment of some of the RMB bonds.
Country Garden’s new home sales in August were down 70% compared to the same month a year earlier. If sales do not recover, the developer faces default, analysts say.
Ukraine will file a lawsuit with the World Trade Organization (WTO) against Poland, Hungary and Slovakia over their refusal to lift the ban on Ukrainian agricultural products, Taras Kachka, Deputy Minister of Economy and Trade and Ukraine’s trade representative, told Politico.
“It is important to prove that these actions are legally unlawful. That’s why tomorrow we will start the court proceedings,” Kachka said last Sunday, adding that Kyiv is preparing to take retaliatory measures against Polish fruit and vegetable exports.
Commenting on the introduction of unilateral bans by Poland, Hungary and Slovakia on Ukrainian grain after the European Commission’s decision to lift the restrictions, Kachka said that “in our opinion, these measures by Hungary and Poland are a statement of total distrust of the European Commission.”
Ukraine’s trade representative believes that the open defiance of Brussels by Poland, Hungary and Slovakia was not just an internal EU matter, but caused what he called “the biggest systemic problem” – whether international trading partners can trust what Brussels says on behalf of the EU.
“For many years, the European Commission has been the mediator in trade negotiations and the trade policy institution for the entire EU. And we are used to working on this basis,” Kachka said, adding that, in his opinion, “the systematic approach of Budapest and Warsaw to ignore the position of the EU institutions in trade policy will be a problem for the EU as a whole, because there is no unity here.”
Kyiv plans to sue the three countries at the World Trade Organization rather than through its own trade agreement with the EU. “I think the whole world needs to see how EU member states behave toward their trading partners and their Union, because it can affect other states,” he emphasized.
While Slovakia simply extended the EU’s previous ban on four types of grain, Poland over the weekend introduced additional bans on Ukrainian flour and feed. Hungary, according to Kaczka, is going even further and banning 25 more products that were not previously discussed, including meat.
“These arbitrary bans are ridiculous. I think that Hungary is making a political statement here that it wants to block trade with Ukraine and completely ignore Brussels. And that’s why I think this is a very bold move against both of us by Budapest,” Kachka emphasized.
While Hungary’s additional bans are mostly symbolic, given that Ukraine does not export much beef and pork to the country, Poland’s measures will affect a significant portion of Ukraine’s exports, Kachka said. If Warsaw does not lift these additional bans, “we will be forced to take measures in response to additional products and ban imports of fruits and vegetables from Poland.”
The governments in Budapest and Warsaw have said they are acting to protect their farmers from a surge of Ukrainian produce that has led to lower prices, but Kaczka denied that reasoning is flawed: “The Polish ban will not help farmers, it will not affect prices because prices are global – what they do is based on public opinion.”
An EU official told the publication that Brussels hopes to solve this problem by forcing Kyiv to impose its own export restrictions in the event of a sudden surge in exports.
When asked about this potential agreement, Kachka said that Kyiv is ready to “take responsibility for ensuring that exports from Ukraine do not cause a tsunami in neighboring countries” and will introduce a system of “real-time” grain export licenses for both countries, which will slow down exports to neighboring countries and allow Ukraine to “react quickly” if a surge is detected.
As reported, the ban on the export of wheat, barley, rapeseed and sunflower seeds from Ukraine to Poland, Hungary, Slovakia, Romania and Bulgaria, introduced on May 2 for the period until June 5, was extended until September 15.
On Friday, September 15, the EU allowed the ban to be lifted after Ukraine promised to take measures to tighten export controls to neighboring countries. On the same day, Poland, Hungary, and Slovakia imposed unilateral bans on imports of Ukrainian agricultural products. In addition to wheat, rapeseed, sunflower, and corn, Poland banned imports of cereals and flour, while Hungary expanded the list to 25 items.
Starting September 20, restrictions on the entry of trucks into the Ukrainian capital will be in effect during rush hours, the Kyiv City State Administration’s telegram channel reported on Monday.
The restrictions will be in effect in the morning from 7:00 to 10:00 and in the evening from 17:00 to 20:00 and will apply to trucks with a permitted maximum weight of more than 4.5 tons.
“The decision was made by the Kyiv City Defense Council to relieve the capital’s roads during rush hours. The Kyiv Patrol Police Department will monitor compliance with these restrictions,” the statement said.
According to the Ministry of Economy, the average annual exchange rate of the hryvnia to the US dollar in 2023 is expected to be 37.5 UAH/$1 in the draft state budget for 2024, compared to 32.3 UAH/$1 last year.
For 2024, the draft state budget provides for an average annual exchange rate of 41.4 UAH/$1.
As reported, the average annual exchange rate for this year during the adoption of the state budget for 2023 last fall was expected to be 42.2 UAH/$1, and the exchange rate at the end of 2023 was 45.8 UAH/$1.
At the same time, the National Bank has kept the official hryvnia exchange rate fixed at 36.57 UAH/$1 since the end of July 2022. On the cash market, the exchange rate has stabilized at around 38 UAH/$1 this year, while last year it was falling to 39 UAH/$1 and even more.
Over the past week, following the announcement by Finance Minister Sergii Marchenko of the forecast for the average annual exchange rate for 2024, the hryvnia has fallen to 38.3 UAH/$1 on the cash market.
In a September survey, members of the European Business Association predicted an average annual exchange rate of 41 UAH/$1 for 2024, while a year ago they expected 43 UAH/$1 for 2023.
The National Bank of Ukraine (NBU) proposes to raise the corporate income tax rate from 18% to 38% in 2023-2024, NBU Governor Andriy Pyshnyi said.
“Our forecast is that additional budget revenues if the current rate is raised to 38% will total more than UAH 20 billion this year and next year,” he wrote on Facebook.
According to him, such a tax design will have a limited impact on macrofinancial stability and at the same time support Ukraine’s defense capabilities.
The NBU governor, citing the monitoring of the financial condition and the results of the assessment of the banks’ stability, believes that financial institutions are quite capable of making additional payments in the current environment. According to the regulator, the tax rate increase will have a limited impact on lending and deposit rates, given the banks’ sufficient margins.
As reported, the National Bank considers additional taxation of banks to be a justified temporary step in view of the war, seeing financial and legal grounds for this, but proposes to increase the tax rate on banks’ profits instead of taxing net interest income as proposed by MPs.
According to Pyshnyi, this is the version the NBU will discuss with the Parliamentary Committee on Finance, Taxation and Customs Policy in the near future.
He also said that the market participants with whom the central bank communicated were sympathetic to this position.
According to the NBU, the net profit of 64 operating Ukrainian banks in the first seven months of this year amounted to UAH 83.2 billion, while the income tax was UAH 14.4 billion, including UAH 34.4 billion and UAH 7.9 billion for PrivatBank, and UAH 18.8 billion and UAH 0.1 billion for four other state-owned banks.
In late August, MPs submitted to the Rada a bill to tax banks’ net interest income at a rate of 5% in 2024-2026 (in addition to corporate income tax), which could bring in about UAH 10 billion to the state budget next year, according to their estimates. In the first half of 2023, banks’ interest income reached UAH 141 billion, including UAH 73.5 billion from transactions with government securities, and net interest income for the same period amounted to UAH 93.6 billion, up 75% compared to the pre-war period of 2021.
