Dear Investors,
We invite you to review the market overview and the performance of OTP Capital’s mutual investment funds in December 2024.
GENERAL ECONOMIC SITUATION IN UKRAINE
In the second half of 2024, inflation accelerated as expected. However, in the final months of the year, the growth rate of consumer prices significantly exceeded the NBU’s forecast, prompting the regulator to adopt a tighter monetary policy. On December 11, the Monetary Committee decided to raise the key interest rate from 13% to 13.5%. These measures, along with efforts to stabilize the currency market, aim to curb price pressures and return inflation to forecasted levels in 2025.
In December, the currency market showed increased demand for foreign currency, causing the official exchange rate of the hryvnia to weaken by 1% (from 41.62 UAH/USD to 42.05 UAH/USD), and the cash rate by 2.1% (from 41.91 UAH/USD to 42.48 UAH/USD). A moderate depreciation to 43-44 UAH/USD is expected by the end of the first quarter of 2025.
Hryvnia Investments
Demand for hryvnia government bonds (OVDP) remained stable in December, with yields holding at November levels:
- 15.2% for bonds with maturities up to 1.4 years
- 16.2% for bonds with maturities up to 2.4 years
- 16.5% for bonds with maturities up to 2.9 years
“Reserve” OVDPs with longer maturities and specific conditions targeting strategic investors, such as banks, were placed at yields of 14.2%-15% due to high demand from banks.
Fixed deposit rates remained unchanged in December, ranging from 8%-12.5% in hryvnia and up to 2% in USD, depending on the deposit term.
Foreign Currency Investments
- OVDP: Yields on foreign currency OVDPs at primary auctions remained at 4.6%-4.7% in USD and 3.25% in EUR. On the secondary market, yields did not exceed 4.2% in USD and 3% in EUR.
- Eurobonds (OZDP): Investor optimism regarding the end of the war in Ukraine, amid geopolitical changes in December, boosted demand for Eurobonds. As a result, bond prices rose by 5.5%-8% across the board, depending on the maturity, positively affecting the returns of currency funds.
FUND PERFORMANCE UNDER OTP CAPITAL MANAGEMENT
OTP Classic
In December, the OTP Classic fund sold OVDPs worth 56.6 million UAH and acquired OVDPs worth 51 million UAH with better yields. Deposits were placed as follows: 15.1 million UAH in JSC “Ukreximbank”, 3.5 million UAH in JSC “Taskombank”, 11 million UAH in JSC “PUMB”, 15.8 million UAH in JSC “State Savings Bank of Ukraine”, and 3.7 million UAH in JSC “Sense Bank”.
In the reporting month, the OTP Classic fund earned 1.1% for its participants. Over the past 365 days, the fund generated an annual return of 15.9%.
OTP Kids
No portfolio activities were conducted for the OTP Kids fund in December. The fund earned 0.7% in the reporting month, with an annual return of 19.7% over the last 365 days.
OTP Valutnyi
There were no portfolio activities for the OTP Valutnyi fund in December. The fund earned 3.5% in December and delivered an annual return of 29% in USD over the past 365 days.
OTP Equity Fund
In December, OTP Equity Fund focused on reallocating funds into short-term deposits at maximum rates, placing 1 million UAH each in JSC “Ukreximbank”, JSC “Ukrgasbank”, JSC “Piraeus Bank”, and JSC “Taskombank”.
Demand for shares of JSC “Raiffeisen Bank” was sluggish, resulting in a slight price decrease. However, this did not affect the fund’s performance, with the OTP Equity Fund earning 1.1% in the reporting month and achieving an annual return of 20.9% over the past 365 days.
CONCLUSION
December 2024 concluded with stable results for OTP Capital’s mutual investment funds amidst mixed economic signals. Rising inflation and the NBU’s rate adjustment contributed to increased yields on hryvnia assets. Optimism in the currency market positively impacted the performance of funds with foreign currency investments.
OTP Capital continues to manage client assets effectively, adapting portfolios to current market conditions.
