Stock market of Ukraine: market situation and investor reaction to escalation conflict with Russia
Last week we had a slide in Ferrexpo (-13%) and a 2.8% drop in MHP. Milkiland plunged by 23% on tiny volumes after reporting expectedly weak 3Q18 results. Strong recovery in Kernel (+4.0%) and further growth in IMC (+2.5% w-o-w and +21% q-o-q) was a compensation for FXPO.
Among PFTS-traded names, most traded lower w-o-w, including Ukrnafta (-6.2%), Centrenergo (-4.0%), and Donbasenergo (-2.6%). News-wise, five companies were reported to have applied to bid in an auction for a 78% stake in CEEN. Also, MHP signed an agreement to acquire a 90.68% stake in Perutnina Ptuj, a Slovenian-based poultry producer with assets across Southeast Europe.
With the latest escalation of the military conflict with Russia, we doubt local stocks can find stronger bids in the current environment and suggest negative-sentiment picks for the week ahead.
In particular, the ongoing slide in iron ore prices (-7% last week and a further c. -7% today) may compound pressure on FXPO on top of its sharp drop last week, with the heightened military risk being an additional factor for all stocks. Ukrnafta is on the list due to a sharp drop in oil prices (-12% w-o-w) and negative sentiment overall. IMC has rallied strongly, and profit-taking in the current downbeat environment looks likely. The same is the case for Kernel, the most liquid Ukrainian stock on the WSE and top performer last week.