Today's Major Market Move: Ukrainian Equity Market Down 50% for the Year

After Greece and Cyprus, the third worst performing equity market has been in the Ukraine, with the main Ukrainian equity index, the PFTS Index, down 50.8%.

Click on image for a larger view.Click here for a live version of the chart.

Many of the companies in the PFTS are in the raw materials or industrial segments. I'm going to use copper futures as a proxy indicator for commodities and industrial activity and the Greek Equity Index FTSE/ASE 20 Index as a proxy indicator for investor confidence in PIIGS equity markets. I would argue that making a comparison between Ukraine and the PIIGS is valid considering that they have similar debt/GDP levels and are essentially within the same geographic region. Here is the chart comparing
these 3 entities:

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It is interesting to see that the PFTS Index and copper futures tracked very closely together from the beginning of the year until the end of May. That's when European sovereign credit issues really began to dominate the economic discourse and one can see how Ukrainian equities disconnected from copper and began to more closely track Greek equities. Actually Ukraine is in a worse position economically than Greece because they lack one extra buffer, the EU. Ukraine has to go directly to the IMF when things get out of control, which has happened numerous times since the Soviet breakup. Ukraine is now the 2nd largest borrower from the IMF ($9.2 billion) after Greece ($15.6 billion), with Portugal coming in a close third ($9.1 billion) (source www.imf.org). However even with that extra buffer, you can see that it doesn't completely prevent EU members from still having to tap the IMF.