Analysts from Concorde Capital, ICU and state-owned Oschadbank, as well as expert Eric Naiman, interviewed byInterfax-Ukraine, said that the sharp rise in prices for Ukrainian stocks and Eurobonds on Thursday of this week was due to speculative demand amid news of a peace deal between Ukraine and Russia.
“There was speculative demand for Ukrainian assets – Eurobonds and stocks – in the hope of an early truce. The very fact of its signing (if and when it happens) is likely to be the peak of prices,” commented Nayman.
Oleksandr Parashchiy, head of the analytical department at Concorde Capital, said that the situation with the active growth of Ukrainian asset prices “looks like a misunderstanding”.
“Obviously, they are buying up everything Ukrainian amid speculation about an imminent peace. The funniest (or saddest) thing is that since the beginning of the year, shares of companies whose assets are entirely located in Luhansk and Donetsk regions have grown the most: “Agroton – +51%, Coal Energy – 57%,” he said.
Sergiy Shvets, Head of the Investment Department of Oschadbank, noted that in general, Ukrainian companies demonstrate good financial results, which is reflected in revenue growth. The expert believes that the upward trend in prices is natural.
“However, I don’t see any reason for a sharp rise in stocks this week. Except, perhaps, for optimistic expectations of a super quick end to the war,” Shvets concluded.
Vitaliy Sivach, a trader at ICU Group, also attributed this week’s rise in Ukrainian stocks on the Warsaw Stock Exchange to the growing likelihood of a peace agreement with Russia, which the market took as a signal.
“If a peace deal is indeed reached, it will be a powerful catalyst for all Ukrainian assets. We are already seeing a rally in sovereign bonds, as the market has been expecting this scenario for a long time – since Trump was elected president. As a result, Ukrainian assets have been growing for three months in a row,” Sivach comments.
He assesses the probability of the deal as high and believes that if it happens, Ukrainian stocks will rise under the influence of several factors: increased company revenues and revised market valuations.
“First, the discount due to military risks will disappear. Secondly, growing revenues will allow the market to pay a premium for such assets. That is why we are now witnessing active growth, and in a favorable scenario, WIG-Ukraine can easily rise to 600 points. If everything calms down on the battlefield, everything will depend on the developments after the elections, but 600 points is far from the ceiling,” Sivach said.
For his part, ICU financial analyst Mykhailo Demkiv noted the rise in prices for Ukrainian Eurobonds based on the news of possible peace talks.
“Their value has been rising over the past 3 days in the range of 4.5-8%, as investors see the end of the hot phase of the war as increasingly likely,” he emphasized.
The WIG-Ukraine index of Ukrainian stocks on the Warsaw Stock Exchange (WSE) jumped by 19.6% on Thursday and added another 1.75% on Friday to 439.27 points. The growth on Friday was driven by a rise in the price of IMC and Astarta Holding shares by 2.86% and 0.71%, respectively, as the share of these companies in the index is 43.965% and 35.393%, respectively.
Meanwhile, shares of Ferrexpo and MHP on the London Stock Exchange on Friday rose by another 9.43% and 1.49%, respectively.
At the same time, Ukrainian sovereign bonds, after rising on the previous days, corrected in price by 0.52-0.98% on Friday.
