Dear Investors,
We are pleased to present the performance results of the mutual investment funds managed by OTP Capital.
NBU Actions
Macroeconomic Environment in Ukraine in July 2024:
- Inflation accelerated to 4.8% year-on-year.
- The industrial producer price index increased by 14%.
- The NBU decided to pause the reduction of the discount rate at its regular July meeting, keeping it unchanged at 13%.
- Further increases in business expenses, significant hikes in electricity tariffs for households, and the effects of the summer drought on this year’s crop yield.
Hryvnia Instruments
Government Bonds (OVDP). The Ministry of Finance began lowering yields on hryvnia-denominated OVDP at primary auctions across the entire OVDP line:
- Up to 1 year: 14.7% – 14.8%
- Up to 2 years: 15.2% – 15.5%
- Up to 3 years: 16.8%
Deposits. Interest rates on term deposits stabilized and remained at June levels of 8% – 12.5%.
Hryvnia Exchange Rate Against the Dollar. The NBU continues its softening policy on the foreign exchange market and helps the market avoid peak loads. In July, the demand for foreign currency was intense, leading to a weakening of the official hryvnia exchange rate to 41.65 UAH/USD in mid-month. Through interventions and administrative measures, the NBU calmed the currency speculators, and as a result, the official hryvnia exchange rate decreased to 41.12 UAH/USD, while the cash rate ended the month at 41.3 UAH/USD.
Foreign Currency Instruments
Government Bonds (OVDP). Yields on foreign-currency-denominated OVDP remained unchanged in 2024 at primary auctions: 4.6% – 4.7% in USD and 3.25% in EUR. However, by introducing placement volume restrictions, the Ministry of Finance forces investors to compete based on yields to maturity. On the secondary market, yields on foreign-currency OVDP do not exceed 4.2% in USD and 3% in EUR.
Eurobonds (OZDP). Demand for Ukraine’s Eurobonds in July was influenced by news of an agreement on restructuring with a creditors’ club representing about 20% of all holders. An unconditional write-off of 37% of the nominal value of OZDP and the exchange of the remainder for new OZDP issues, each with its specified maturity date and coupon payment terms. The new OZDP issues will be serviced unconditionally by the Ukrainian government. Although these conditions have not yet been supported by the remaining 80% of holders, prices for OZDP increased over the month from $310-$330 to $350-$388.
Performance of OTP Capital-managed Funds
In July, the OTP Classic Fund sold OVDP worth UAH 5.7 million from its portfolio and purchased OVDP worth UAH 7.5 million with better yields. In the deposit portion, funds were placed in Sens Bank amounting to UAH 3.7 million. In July, the fund generated a 1.3% return for its participants in the past month. Over the past 365 days, the fund generated a 18.0% annual return.
In July, the OTP Kids Fund purchased OVDP worth UAH 32 million. No transactions were conducted in the deposit portion. The fund generated a 1.2% return for its participants in the past month. Over the past 365 days, the fund generated a 20.0% annual return.
No transactions were made with the assets of the OTP Currency Fund during the reporting month. The increase in the value of OZDP by 6% – 15.4% in July helped the fund generate a 6.6% return for its participants in the past month. Over the past 365 days, the fund generated a 5.8% annual return in USD.
In July, the OTP Equity Fund focused on reallocating funds into short-term deposits at maximum rates. Specifically, deposits were reallocated to Ukreximbank for UAH 1 million, Ukrgasbank for UAH 1 million, and Tascobank for UAH 1 million. In the reporting month, the OTP Equity Fund generated a 0.6% return for its participants in the past month. Over the past 365 days, the fund generated a 13.8% annual return.
