OTP Capital Column: View on the current events
Dear investors and depositors of investment and pension funds managed by OTP Capital. We continue to publish prompt messages regarding the vision of the current economic situation in the world and Ukraine, as well as the status of assets that are under our management.
What is happening in the world? The financial markets continue to be volatile, but positive trends are prevailing. Since the beginning of the week, all major stock indices have been increasing. The main reason is decline in the coronavirus spread in the major economies of the world. And given the enormous amount of aid that has been provided by most major countries, the market optimism is very logical.
How does Ukraine react? The voting for the laws of last Tuesday, which allow us to get support from the Western partners, as we predicted in the previous review View on the current events, has significantly reassured the Ukrainian financial market and the foreign investors. The consequence of the stabilization of the financial situation and positive expectations is a significant UAH increase against USD from 28 to 27 UAH/ASD, the recovery of demand, lower yields, reduced spreads on government bonds, as well as the increased liquidity in the banking system.
The evaluation of G-bonds in portfolios of funds managed by OTP Capital has also undergone positive trends. Today, the NBU has reduced the yields of all government bonds with different maturities, and this was reflected in the dynamics of funds.
The trend of decrease in government bond yields is likely to continue as the situation stabilizes. The most critical issue right now is the signing of a memorandum with the IMF. There are risks of nonsigning. Moreover, they depend on the adoption of the “bank” law, which can be technically delayed because of the record 16,000 amendments that have been made recently. However, despite the presence of legislative spam, the country’s leadership has a clear and firm position regarding the IMF. That is why the expectations remain positive.
