Dear members of OTP Pension and FreeFlight!
Please find below the results of the non-state pension funds managed by OTP Capital.
Actions of the NBU
Macroeconomic environment in Ukraine in May 2024:
the key policy rate is kept at 13.5%
inflation since the beginning of the year amounted to 1.4%
increased demand for long-term government bonds
decrease in the yields of domestic government bonds
increased demand for foreign currency purchases – hryvnia depreciation
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 – 14.9%
from 1.5 to 2 years – 15.9%
up to 3 years – 16.6%.
Deposits. Time deposit rates remained unchanged at 5.0%-12% depending on the term and bank
Hryvnia exchange rate against the dollar. The NBU continues its policy of easing the foreign exchange market and helping the market avoid peaks. In May, there was a strong demand for foreign currency, but the regulator did not prevent the hryvnia from weakening, maintaining moderate interventions. As a result, the official hryvnia exchange rate weakened by 2.3% from UAH 39.66 to UAH 40.59 per dollar, and the cash exchange rate by 3.1% to UAH 41.11 per dollar.
Equities. The UX equity index continued its downward trend in May, losing 7.7%. 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: MHP – 33.3%. PJSC Donbasenergo, -6.7%.
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 domestic government bonds do not exceed 4.3% in the dollar and 3% in the euro.
EUROBONDS. Demand for Ukraine’s Eurobonds is highly volatile and, as a result, the prices of domestic government bonds are highly volatile, which is reflected in the fund’s performance. In particular, in anticipation of the decision on the restructuring of the external debt from the government, the prices of government bonds fell by 2.4%-4.1% in May. The price in dollars of government bonds maturing in 2025, which are in the portfolio of the Free Flight NPF, decreased by 3.2%.
What happened to the assets of the OTP Pension fund?
In May, the OTP Pension fund sold UAH 153.4 million worth of government bonds from its portfolio and purchased UAH 160.1 million worth of government bonds with a better yield. On the deposit side, funds were placed in the amount of UAH 7.4 million in JSC TASKOMBANK.
Effective rebalancing of the portfolio in the amount of 30% of total assets and a decrease in yields across the entire line of government bonds accumulated into a high result of the fund for the reporting month. In May, OTP Pension earned 2.7% (or 37.2% p.a.) for its participants.
In general, in May, the assets of the OTP Pension fund increased by UAH 19,581,663, or 3.7%. The total net asset value at the end of May amounted to UAH 549,914,846. In May, participants contributed UAH 5,868,424 to the fund, while UAH 811,634 in pensions were paid out.
What happened to the assets of the Free Flight fund?
In May, the FreeFlight Fund’s portfolio included foreign currency government bonds worth UAH 0.77 million, as well as deposits with the following banks – for the amount of USD 8.1 thousand with Tascombank JSC and UAH 2.3 million with Ukrgasbank JSC.
The decline in the value of government bonds in May had a negative impact on the fund’s results. “FreeFlight” in May decreased by 0.2% (or by 1.9% per annum) in dollars.
Overall, in May, FreeFlight’s assets increased by USD 1,811,924 or 4.0%. The total net asset value at the end of May amounted to UAH 46,664,944. In May, participants contributed UAH 939,307 to the fund, while UAH 1,673 were paid in pensions.
We continue to work. So stay calm, believe in Ukraine and invest consciously!
Translated with DeepL.com (free version)
