The Business Activity Expectations Index, calculated by the National Bank of Ukraine (NBU), in August increased by 1 point (p.), to 47.9 after growing in July and June by 1.5 points and 9.6 points respectively, however, remains below the neutral value of 50 points and signals the prevalence of pessimistic business expectations.
“Business is cautiously assessing the results of its activities against the background of the prolongation of the adaptive quarantine. Expectations of enterprises for the fourth month in a row are below the equilibrium values,” the central bank said on its website.
According to the report, in August trade enterprises significantly improved their expectations: the index increased by 4.3 points, to 52.3. The National Bank clarified that the optimistic expectations of respondents in this area are associated with the softening of quarantine and an increase in consumer demand.
It is indicated that representatives of the trade sector are optimistic about the increase in trade (the index increased to 51.5 from 48.9 a month earlier) and the volume of purchases of goods for sale (the index increased to 57.6 from 45.5).
In addition, retailers expect a significant increase in the cost of goods purchased for sale (the index rose to 74.2 from 61.4 in July) due to high purchase prices.
According to the report, despite a slight increase in the index of industry respondents – by 0.8 points – to 48.3, their expectations remain pessimistic. Representatives of this industry downgraded their estimates of stocks of raw materials and supplies (to 42.9 from 52.7 in July), at the same time they strengthened expectations for an increase in prices for their own production (to 63.3 from 59.1 in July).
The creation of an investment court, an idea promulgated by Ukraine’s Justice Minister Denys Maliuska, could facilitate doing business in Ukraine, Omerta Organized Law Group head Yevhen Fedoseyev has said.
“The declared creation of an investment court will greatly facilitate doing business in Ukraine, because if investors have a virtually unconditional guarantee that in any case, their property rights and interests are practically not threatened, they will start investing more in our country,” he told Interfax-Ukraine.
The lawyer noted that this initiative is not new, and similar courts already exist in a number of countries.
“Investors from all over the world are increasingly turning to investment arbitration as a way of resolving a dispute with the state every year. This mechanism for protecting the rights of an investor has proved to be effective, which is confirmed by both the number of international bilateral and multilateral agreements containing clauses on investment arbitration, and the number of initiated cases, “he said.
Fedoseyev recalled that a permanent arbitration institute, the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry, has been operating in Ukraine for more than 25 years, however, appeals to him are not too popular, since none of the Ukraine agreements concluded on mutual assistance and protection of foreign investment provides for the ICAC at the Ukrainian Chamber of Commerce and Industry as an institution for resolving investment disputes, as well as because of general legal nihilism. ”
“Of course, the new court in Ukraine will need to develop a practice that has been built in the courts of Western Europe for decades, however, the transparency of the creation of such a body, its competence, objectivity can create a positive image not only for the body itself, but also for the state as a whole, which will ensure inflow of new investors into the country, “the lawyer emphasized.
As reported, in early July at a meeting with European business representatives, Maliuska announced an initiative to create a concept for creating a separate court that would deal with investors’ cases – arbitration or a separate court that would consider cases with the participation of business.
The Verkhovna Rada of Ukraine supported bill No.2285-d on state regulation on organizing and conducting the gambling activity.
Some 248 MPs voted for relevant bill No. 2285-d at second reading at a meeting on Tuesday.
The law establishes a list of gambling activities that are permitted in Ukraine. In particular, it includes gambling in casino and online gambling establishments, betting activities at betting shops and via the Internet, issuing and conducting lotteries, and playing poker via the Internet.
The law allows the placement of casinos in Kyiv on the territory of five-star hotels, and for other settlements the law allows them to be placed in hotels of four and five star categories.
MPs also returned the requirement to place gambling establishments at a distance of at least 500 meters from educational institutions, and also expanded the circle of people who could apply to the court with a statement of limitation.
The law also provides for an online gaming machine monitoring system.
Trade in shares of foreign-registered companies doing business in Ukraine
Almost 30% of companies plan to sell their business or their assets in the next six months to a year, while only one in five will do this because of the crisis, according to a survey of 56 companies conducted by Avellum law firm.
“This shows that most large Ukrainian companies have relatively successfully withstood the economic crisis associated with COVID-19,” the study says.
Moreover, more than 60% of companies plan the sale and are ready to lower prices.
“However, in the future, sellers may increase prices for objects of sale, because today the number of potential buyers significantly exceeds the offer,” the authors of the study note.
Some 50% of the representatives of large business polled are ready to buy companies or assets. All of them noted that they expect a discount in price, since weak businesses are usually put up for sale. At the same time, more than 40% of likely buyers are interested in acquiring due to a coronavirus crisis.
“This suggests that a significant part of the companies has opportunistic sentiments and believes in the rise of the Ukrainian economy,” the authors of the study believe.
As the results of the survey showed, more than 60% of potential buyers have not changed their plans to acquire assets in Ukraine, that is, they continue to believe in the attractiveness of the market in this country and see profit in expanding their share in it. The remaining almost 40% refused to buy assets precisely because of the crisis.
The survey also showed that over 60% of companies do not see the need for advisers, since the asset is sold at a discount. This is contrary to the buyers’ expectations regarding guarantees that require the involvement of lawyers.
The survey was conducted online in June 2020 among the owners, top managers and heads of legal departments of Ukrainian and international companies.
The Business Activity Outlook Index (BAOI) calculated by the National Bank of Ukraine (NBU) grew by 9.6 points in June, to 45.5 points, which is lower than the neutral index reading of about 50 and means that pessimistic expectations of business prevail, the regulator said on its website on Wednesday.
“Ukrainian business is gradually recovering from the blow that the coronavirus crisis inflicted on it. The NBU poll indicates that the mood of entrepreneurs in June improved. Economic activity gradually recovered, both in Ukraine and abroad, after quarantine restrictions were eased,” the NBU said.
According to the regulator, the new wave of quarantine easing contributed to economic activity of retail companies – the diffuse index (DI) grew to 50.5 points from 37.6 in May.
The service sector also showed better expectations: DI grew by 12.3 percentage points, to 40.8.
Expectations of industrial enterprises, which DI grew from 40.4 to 49.2, also improved.
Construction enterprise expect the worsening of its activities: DI in June fell by 4.1 pp, to 36 points.
Employment assessments of all sectors retain pessimistic.
