Dear investors, please find below the performance results of the mutual funds managed by OTP Capital.
Actions of the NBU
Macroeconomic environment in Ukraine in March 2024:
- reduction of the key policy rate by 50 p to 14.5% in February
- low inflation – 4.3% in February
- managed flexible hryvnia exchange rate without significant fluctuations
- minor interventions within USD 1.7 billion.
Receipt of the first tranche of aid from the EU in March in the amount of about $4.8 billion and from Canada and Japan in the amount of $2.5 billion will help the government to balance the budget in the first half of 2024.
Hryvnia instruments
DOMESTIC GOVERNMENT BONDS. The Ministry of Finance began to reduce yields on hryvnia domestic government bonds at primary auctions for the entire line of domestic government bonds
- up to 1 year – 16.24%.
- from 1.5 to 2 years – 17.2%
- up to 3 years – 18.26%.
Deposits. Time deposit rates gradually decreased to between 5.5% and 13%, depending on the term and bank
Hryvnia exchange rate against the dollar. The NBU continues its policy of easing the FX market and helping the market to avoid peaks. Although the demand for foreign currency was elevated in March, the regulator did not prohibit the hryvnia from weakening, maintaining moderate interventions. As a result, the official hryvnia exchange rate depreciated by 2.5% from UAH 38.05 to UAH 39.01, and the cash exchange rate by 2.7% to UAH 39.45.
Stocks. The UX equity index continued its downward trend for the third month in a row, losing 9.1% in March. Once again, we note that the lack of liquidity in the equity market is the main feature of the stock market under martial law. The main factors behind the decline were the following stocks in the index basket: Raiffeisen Bank (-10.8%) and Centrenergo (5.7%).
Instruments in foreign currency
DOMESTIC GOVERNMENT BONDS. Yields on foreign currency-denominated domestic government bonds remain unchanged in 2024 at primary auctions at 4.6%-4.7% in the dollar and 3.25% in the euro. However, by imposing restrictions on the volume of placements, the Ministry of Finance is forcing investors to compete on the basis of yield to maturity. On the secondary market, yields on foreign currency government bonds do not exceed 4.3% in the dollar and 3% in the euro.
STATE DOMESTIC BONDS. The IMF demands to agree on a clear and understandable restructuring of the repayment of domestic government bonds within the framework of the signed 4-year EFF program. The possible postponement of repayments for 4 years, until 2028, and the write-off of liabilities in the amount of 40%-50% of the face value and accumulated amounts across the entire line of government bonds, as well as an annual payment of 4% instead of the current 7.75%, pushed up demand for government bonds in March. As a result, prices increased by 19.4%-22.2% across the entire line of government bonds. The price in dollars of government bonds maturing in 2025 held by Free Flight NPF increased by 22.2%.
What happened to the fund’s assets managed by OTP Capital?
OTP Classic
In the reporting month, the available funds of the OTP Classic fund portfolio, UAH 1 million, were placed on deposit in PJSC Tascombank.
In March, the OTP Classic fund earned 1.4% (or 17.2% p.a.) for its participants.
OTP Children
In the reporting month, the OTP Children fund sold UAH 1.3 million of domestic government bonds from its portfolio.
In March, the OTP Children fund earned 1.7% (or 22.6% p.a.) for its participants.
OTP Currency
In the reporting month, the portfolio of the OTP Currency fund purchased dollar-denominated government bonds in the amount of USD 36.7 thousand.
The growth of government bonds in February helped OTP Currency earn 12.4% (or 295.3% p.a.) for its investors.
OTP Equity Fund
In February, OTP Equity Fund was managed in the direction of re-investment in short-term deposits at maximum rates, in particular, deposits in JSC Ukreximbank for the amount of UAH 0.9 million, JSC Ukrgasbank for the amount of UAH 0.9 million, and JSC Tascombank for the amount of UAH 0.9 million were reallocated.
The fall in shares of Raiffeisen Bank JSC and Centrenergo PJSC in February affected the fund’s performance in the reporting month – OTP Equity Fund fell by 1.4%.
We continue to work. So stay calm, believe in Ukraine and invest consciously!
