Dear Investors,
We present to you the performance results of the mutual investment funds managed by OTP Capital.
NBU Actions
- The macroeconomic environment in Ukraine in June 2024 included:
- Reduction of the discount rate to 13.0%
- Inflation below the forecast, standing at 2.0% since the beginning of the year
- Reduction of the refinancing credit rate to 17%
- Lowering rates on deposit certificates
- Approval of $50 billion financial aid from the G7 countries, covered by profits from frozen Russian assets
Instruments in UAH
Government Bonds (OVDPs). The Ministry of Finance began lowering the yields of UAH-denominated government bonds in primary auctions across the entire range of maturities:
- Up to 1 year: 14.7%-14.8%
- Up to 2 years: 15.2%-15.4%
- Up to 3 years: 16.8%
Deposits: Rates on term deposits reacted differently – some banks lowered rates by 0.5% to levels of 8%-11.5%, while others increased them by 1%-1.5%, driven by liquidity shortages.
Exchange Rate of UAH to USD: The NBU continues a policy of easing in the foreign exchange market and helps the market avoid peak loads. In June, demand for foreign currency was regulated by the central bank’s interventions, which kept the official exchange rate of the hryvnia unchanged at 40.55 UAH/USD, while the cash rate slightly strengthened from 41.1 to 40.9 UAH/USD.
Stocks: The stock index (UX by UB) remained in a sideways trend due to a lack of market transactions. The Ukrainian Exchange might lose its license, according to a statement by the NSSMC. To avoid misleading users, OTP Capital temporarily suspends the analysis and publication of exchange data until its status is clarified and trading resumes.
Foreign Currency Instruments
Government Bonds (OVDPs): The yields of foreign currency-denominated OVDPs remain unchanged in 2024 in primary auctions at levels of 4.6%-4.7% in USD and 3.25% in EUR. However, by imposing volume restrictions, the Ministry of Finance forces investors to compete through yield to maturity. In the secondary market, yields on foreign currency OVDPs do not exceed 4.2% in USD and 3.0% in EUR.
Eurobonds: Demand for Ukrainian Eurobonds in June was influenced by news of negotiations between holders and the government. The creditors’ committee, representing Eurobond holders, initially rejected the government’s proposal, negatively impacting Eurobond prices, which fell to 28%-30%. Subsequently, as the government sought a compromise solution with the holders, demand for Eurobonds began to recover. Consequently, Eurobond prices started to rise, reaching 31%-33% of face value by the end of June. The market remains anxious, awaiting the final restructuring terms, expected to be announced in July.
What Happened with the Assets of the OTP Capital Managed Funds?
OTP Classic
In the reporting month, OVDPs worth 8.1 million UAH were sold from the portfolio of the “OTP Classic” fund, and OVDPs worth 42.7 million UAH with better yields were acquired. Additionally, deposits were placed in the following banks: 11 million UAH in JSC “Tascombank”, 10.3 million UAH in JSC “PUMB”, 2.5 million UAH in JSC “Ukreximbank”, 6.5 million UAH in JSC “ProCredit Bank”, 6.7 million UAH in JSC “Oschadbank”, and 2 million UAH in JSC “SENS Bank”.
In June, the “OTP Classic” fund earned 1.2% (or 15.6% annualized) for its participants.
OTP Children
In the reporting month, no actions were taken with the assets of the “OTP Children” fund.
In June, the “OTP Children” fund earned 0.8% (or 10.5% annualized) for its participants.
OTP Currency
The price in dollars of the Eurobonds maturing in 2024-2027, held in the portfolio of the “OTP Currency” fund, increased by 3%-8.6%.
In the reporting month, the “OTP Currency” fund acquired OVDPs denominated in dollars worth 6.2 million UAH.
The rise in Eurobond prices in June helped the “OTP Currency” fund earn 0.7% (or 8.9% annualized) in dollars.
OTP Equity Fund
In June, the management of the “OTP Equity Fund” was focused on reinvesting funds into short-term deposits at maximum rates, including reallocations to JSC “Ukreximbank” amounting to 1 million UAH, JSC “Ukrgasbank” amounting to 1 million UAH, JSC “Tascombank” amounting to 1 million UAH, JSC “Piraeus Bank” amounting to 1 million UAH, and JSC “Oschadbank” amounting to 1 million UAH.
In the reporting month, the “OTP Equity Fund” earned 1.9% for its clients.
We continue to work diligently. Keep calm, believe in Ukraine, and invest wisely!
