Dear members of OTP Pension and FreeFlight!
Please find below the performance results of non-state pension funds managed by OTP Capital.
Actions of the NBU
Macroeconomic environment in Ukraine in March 2024:
reduction of the discount rate to 14.5% in March
low inflation – 4.3% in February
managed flexible hryvnia exchange rate without significant fluctuations
reduction of the refinancing rate from 21% to 19.5%
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
Deposits.
UKRAINIAN GOVERNMENT BONDS. Yields on foreign currency-denominated domestic government bonds remain unchanged in 2024 at primary auctions at 4.6%-4.7% in USD and 3.25% in EUR. 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, write-offs of 40%-50% of the face value and accumulated amounts across the entire line of government bonds, as well as annual payments 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 the government bonds maturing in 2025 held by Free Flight NPF increased by 22.2%.
What happened to the assets of the OTP Pension fund?
In March, OTP Pension sold UAH 34.8 million worth of government bonds from its portfolio and purchased UAH 34.7 million worth of government bonds instead. On the deposit side, funds were placed in the amount of UAH 2 million in JSC “FUIB Bank” and UAH 4.1 million in JSC “Ukreximbank”.
In March, OTP Pension earned 1.3% (or 16.4% p.a.) for its members.
In total, in March, the assets of the OTP Pension fund increased by UAH 11,401,679, or 2.2%. The total net asset value at the end of March amounted to . 519,927,614 UAH. In March, participants contributed UAH 5,722,304 to the fund, while UAH 959,564 was paid out in pensions.
What happened to the assets of the FreeFlight fund?
In March, in the portfolio of the FreeFlight fund, we purchased dollar-denominated government bonds for the amount of UAH 1.9 million. In terms of deposits, the fund placed USD 75.5 thousand in JSC “Creditwest Bank” and UAH 1.3 million in JSC “Ukrgasbank”.
The growth in the value of government bonds in March helped the FreeFlight fund to earn 1.9% (or 24.4% p.a.) in US dollars.
Overall, in March, FreeFlight’s assets increased by UAH 2,884,032, or 7%. The total net asset value at the end of March amounted to UAH 44,112,179. In March, participants contributed UAH 996,096 to the fund, while UAH 11,324 in pensions were paid.
We will continue to work. So we stay calm, believe in Ukraine and invest consciously!
