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ICU Research: UkrFinForum-2018: Missed opportunities in emerging markets: known risks and better rewards

September 27, 2018 | Cbonds

Mikhail Galkin, Credit Strategist at Goldman Sachs, says the bank’s trading desk is very constructive for emerging markets as a source of investment opportunities. EMs currently pay excessive interest rates, and the longer this market inefficiency persists, the longer investors in EMs will receive excessive returns. Likening the competition for EM investors to a beauty contest, Galkin says Ukraine looks pretty good within its peer group. One issue that needs to be addressed over time is Ukraine’s local investor base, which is fairly weak right now.
Oleksandr Lyubarev, Director, Corporate Finance and Treasury, Metinvest Group, subscribes to the view that the local bond market’s role remains undervalued. He believes that the local bond market can potentially bring $20bn to Ukraine if the state creates attractive conditions for banks and individual investors.
Yuriy Butsa, Government Commissioner for Public Debt Management, on the other hand, feels that in the EM beauty contest, it is very hard for Ukraine to stand out. Ukraine’s progress in reforms, reducing inflation, and the independence of the central bank do not matter much to investors in EMs. One way to change this attitude over time is to prove Ukraine has enough opportunities to be worth more versus EM peers. But it is a long and tough job.
Jonathan Neill, partner of FPP Asset Management, thinks Ukraine is a frontier market for connoisseurs, so it would be unwise for an asset manager to speak about Ukraine first at the meeting with investors. However, the government is open to western capital, so privatisation of core assets, a liquid stock market, pension and land-market reforms would bring huge amounts of capital to Ukraine.

Company: ICU

Full company nameICU
Country of riskUkraine
IndustryFinancial institutions


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