We are only two days into July but the Ukrainian Equities Index has already managed to gain 18.3% so far for the month. It is the best performing index in July with the Mongolian MSE Top 20 Index in second with a 9.3% gain. Here's the top 10:
We track two Ukrainian indexes, the previously mentioned Ukrainian Equities Index and the PFTS index. We utilize the PFTS as the benchmark but both indexes track very closely to each other over longer time frames.
We haven't been able to figure out why the recent divergence has occurred in July with the UX (Ukrainian Equities Index) up over 18% and the PFTS only up 5% but the above chart would suggest that a long PFTS / short UX strategy would have some success. As for events that might be fueling the recent rally, here are some possibilities: 1) the announcement last week by the ECB that it will take extra steps to shore up European banks 2)
the announcement yesterday that China will provide a $3 billion loan for agricultural projects and (this one might be a stretch) 3) the successful completion of the Euro 2012 soccer tournament that was jointly hosted by the Ukraine and Poland.
Going over to the Ukrainian currency, the Hryvnia has been essentially flat against the dollar in 2012, with the USDUAH cross hovering around the 8.05 level.
Going forward, GDP growth will be muted as Ukraine continues to recover from the 2009-2010 recession and equities have a long ways to go to return to pre-2008 levels.
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