Ukraine Strategy Weekly: More 1H18 Reporting Amid Turkey Turbulence
Following the freefall in Turkish markets (equities -22% w-o-w) and concurrent drop in the EM/FM universe (see more below), local stocks had little chance to avoid being hit by strong negative sentiment across asset classes. As a result, the KP-Dragon index lost 0.6% w-o-w while the local PFTS index slid by 2.1% in UAH and 2.7% in USD terms.
It was another volatile week for foreign-listed stocks (over ¾ of KP-Dragon by weight), with Ferrexpo recovering by 5.3% w-o-w while Regal Petroleum reversed course and lost 25% (after +115% the week before). Large agricultural stocks were less volatile (MHP -0.4%, Astarta -0.7%, Kernel -2.3%) but second tier agros dropped more: Ovostar -2.4%, Milkiland -3.4%, and IMC -4.1%. AST reported weaker early crop harvest volumes (yields -9% y-o-y), which seems to have had no effect on the stock price (most of the w-o-w declines on the WSE were explained by the PLN’s 2+% devaluation vs. the USD).
In the local market, all stocks lost heavily in USD terms, with Donbasenergo
-6.3%, Centrenergo -1.8%, Raiffeisen Bank Aval -1.7%, Ukrnafta -1.6%, and Turboatom -1.4%. However, there was company news from BAVL only: its parent Raiffeisen Bank International reported 2Q18 IFRS results, though its numbers for BAVL were almost in line with the bank’s standalone results (e.g. NI of $54m vs. $52m, respectively). We also upgraded our fundamental view on the stock, assigning a Buy recommendation.