Heroes of Ukraine

«Market Leader» - news and previews making you rich.

Saturday, 21 October 20:46 (GMT -05:00)



Business And Politics News

Why Do EU Countries' Ratings Deteriorate and Ukraine's... Improve?


Investment news, Ukraine. There is something absurd in the investment world: ratings of leading EU countries (Italy, Spain, Portugal, Ireland, Greece, Cyprus etc) deteriorate with only one country in Europe - Ukraine - whose international rating continues rising. Why? Has the country become more attractive to investors? Or reasons lie elsewhere?

 

Let's have a look at the argument of international rating agency, Fitch Ratings, which upgraded its forecast for Ukraine from B- to B on 21 July 2011. What transformations are under way in this nation's economy and what is in for the country's investors?

 

What are some positive things that Fitch Ratings found in Ukraine's investment climate?

 

On 21 July Fitch Ratings raised Ukraine's investment rating from 'stable' to 'positive':
1. The Agency's report. After the Agency's report is viewed closer, the situation looks as follows. Fitch announced an improved forecast for long-term issuer default rating (IDR) of Ukraine in foreign and national currency from 'stable' to 'positive'. As such, the Agency maintained long-term IRDs at B and short-term IRDs at B, too.
2. Ratings of Ukrainian businesses also improved. Fitch upgraded forecasts for DTEK, Metinvest, MHP S.A., OAO Mironovskiy Khleboprodukt and Kernel Holding from 'stable' to 'positive' as a result of an improved sovereign rating.
3. Better ratings of Ukrainian Euro-bonds have been maintained. A little time ago, in June, Fitch ranked Ukraine's Euro-bonds (totally worth $1.25 bn.) at B.
4. Fitch experts' opinion about Ukrainian economy. Nevertheless, Fitch experts noted that Ukrainian economy remains very sensitive to global economic shocks and, as a result, rather vulnerable. Despite some reservations, this is very positive news for the Ukrainian government. It can bring many disappointed investors back to the country.
5. Negative Fitch rating. Remember that the same agency, Fitch, rated Ukraine 'negative' at the peak of the global financial crisis in 2009. This brought about significant flight of capital from the country and threatened formation of a huge budget deficit. The issue of Ukraine's default on credits could easily arise. At that time the situation looked absolutely critical and it took about two years to work it out.

 

What does Ukraine's B+ level stand for in the international scale of credit rating from Fitch Ratings?

 

According to Fitch Ratings:
AAA is the highest level of solvency;
AA - a very high level of solvency;
A - a high level of solvency;
BBB - an adequate level of solvency;
BB - the level of solvency is below adequate;
B - a significantly inadequate level of solvency;
CCC - default possible;
CC - default very likely;
C - default inevitable;
D - default.
Therefore, Ukrainian investors should understand, as experts of the Masterforex-V Academy have explained, that B+ means risky investments for investors even though on this criterion Ukraine came ahead of Greece (CCC) but is below Norway, the Netherlands, Luxembourg, Germany, France, Switzerland, Denmark , Canada, the US, Austria, Sweden, Singapore, Great Britain (all rated AAA).

 

Why was Ukrainian rating raised?

 

It is absolutely obvious, according to experts of the Forex and Stock Exchange Trading Academy of Masterforex-V, that the Agency's findings were based on indicators of the country's economic development and analysis of reforms it has made:
macroeconomic figures. First of all, figures of the gross domestic product (GDP) growth. It was about 4% in Q1 2011 and 3.5-3.8% in Q2. Now Fitch forecasts a GDP growth at 4-5% in not only 2011, but also 2012;
the nation's financial stability. The Ukrainian government has managed to keep public debt within reasonably limits all this time. The exchange rate of the national currency, the Hryvna, has also remained stable and predictable. The rating agency highly appreciated effort of the National Bank of Ukraine;
adoption of a new tax code. This helped substantially reduce the deficit of the state budget. Despite expectations, the new code did not ruin small and medium businesses. Moreover, a lot of limitations on entrepreneurship introduced in the past have been abandoned for the past couple of months;
the pension reform under way. Obviously, the international rating agency, Fitch, highly appreciated how prepared the Ukrainian government is to take unpopular, but necessary measures in the social arena. Even though the draft law about the pension reform has not been signed by the Ukrainian President, technically it became effective after it was adopted by the country's parliament. Outcomes of the pension reform will be obvious in about 2-3 years from now. So, the way Fitch's assessed activities of the Ukrainian government can be regarded only as an advance;
political stabilization in the country. The past two years look like the example of political stability and, accordingly, predictability in the context of endless inter-party battles that shook Ukraine during V. Yuschenko's tenure. This surely adds to the favorable climate for investors.

 

What is in for the exchange rate of the Ukrainian Hryvna in the context of a positive evaluation from this international organization? Traders of the Masterforex-V Academy point out that currently the Hryvna is within a strategic range of the senior TF:
1. A short A/B down has completed:
• 7.9177 = 62% from the entire bullish 7.8725-8.0101;
• the а-в-truncated с correction model. С 7.9836-7.9177

 

A wave of a senior TF is forming upwards. It has already cancelled possible b(C) to the bearish movement (by breaking through the protective pivot):
• В + FZR are necessary, a w1 move up;
• continuation of a series of short waves down.

 

The Editor's Office of Market Leader in conjunction with experts of the Forex and Stock Exchange Trading Academy of Masterforex-V hold a survey in the traders' forum: In your opinion, an improvement in the investment fund climate in Ukraine, based on its Fitch rating, is:
• a reflection of an emerging trend of investment attractiveness of Ukraine;
• a subjective opinion of the Agency that should not be treated seriously.

 

You are free to discuss this article here:   forum for traders and investors

 

Add to blog
Got a question? – Ask it here »
 

Referendum In Catalonia May Hit Europe Harder Than Brexit

The possibility of Catalonia exiting from Spain is dangerous to the integrity of the European Union, even more dangerous than the Brexit. This is what The Daily Telegraph thinks on the matter.

 

Publication date: 01 October 04:58 AM

Trump Announced Revolutionary Tax Cuts for Americans

On Wednesday, September 27th, President Trump announced a tax reform. The thing is that Donald trump promised this tax reform when making his election pledges in 2016.

Publication date: 29 September 07:51 AM

What is so precious about Ukraine for international investors? An American businessman shares his opinion

More and more international investors have been paying attention to Ukraine as a promising area for profitable investing. Cody Shirk, an American entrepreneur, traveler and investor, is now urging international investors to look at Ukraine as a country with really great investment potential, Market Leader reports.

Publication date: 27 September 03:16 AM

China’s Debt Bubble May Trigger Another Global Financial Crisis

The Chinese economy keeps on slowing down as China’s debt bubble is growing. International experts are concerned about that. They are afraid of a new global financial crisis, Market Leader reports. The thing is, the Chinese economy is not growing fast enough anymore. Beijing has to admit the economic slowdown. The entire international expert community is now closely watching this slowdown and expressing their concerns about China’s economic prospects amid the mentioned economic slowdown and inflating debt bubble.

Publication date: 25 September 12:44 PM

Why Is German Parliamentary Election Important to Europe?

Judging by the results of several sociological surveys, the chances of electing Angela Markel for the next 4 years is fairly high at the moment. Even though there is almost no intrigue in the election, the international community has still been closely watching it, Market Leader reports

Publication date: 24 September 12:55 AM

Bitcoin Market Cap Exceeds $150 Billion

Bitcoin’s market capitalization exceeded $150 billion the other day. At the same time, the international expert community keeps on pondering upon the near-term prospects of Bitcoin and other digital currencies.

Publication date: 03 September 11:22 PM

American Sanctions Will Cut Investments In Russia

Some experts say that the next round of anti-Russian sanctions imposed a couple of weeks ago is going to undermine the Russian economy. In particular, they are threatening the investment capital inflow.

 

 
A few weeks after Donald Trump reluctantly signed the new sanctions approved by the U.S. Congress, Russian and foreign investors are still trying to figure out what the actual consequences of this decision are going to be. For now, they seem to have understood enough to be afraid of long-term negative consequences for their existing or potential investments in the Russian economy, which has just started recovering after a 2-year recession.
 
Publication date: 31 August 01:44 AM

New U.S. Sanctions Against Russia Will Result In Geopolitical Changes

Political expert Lilia Shevtsova commented on the new sanctions against Russia imposed by the United States. She claims that the geopolitical situation in the world is going to change in the near future due to the sanctions.

 

She claims that introducing those sanctions was like a surgery. As the result of this surgery, the USA got rid of a foreign body. After that, Washington is probably going to reset their foreign policy. However, nobody can definitely say what exactly this event is going to result in. But one thing is sure – something is definitely going to change in the world order, and this creates certain threats for Russia.

Publication date: 28 August 03:32 AM

New Sanctions Against Russia Will Last Long

Russian political expert Leonid Shvets commented on the new round of anti-Russian sanctions. For starters, he claims that Russia has already turned into America’s biggest enemy. The thing is that the new law signed by Donald Trump not so long ago is designed to fight America’s enemies with the help of sanctions. North Korea and Iran are also on the same list.

 

 
Publication date: 28 August 01:02 AM

New Sanctions Will Hit Putin Personally, Piotrovskiy Says

This time, American sanctions are going to hit even Vladimir Putin himself, Andrey Piotrovskiy says. He says that the devil is in the detail. The thing is that the new sanctions approved by the U.S. Congress and signed by Donald Trump (even though he was against those sanctions), obliges the U.S. financial intelligence to provide the Congress with the information on all the known and probable assets belonging to the all the high-ranking Russian politicians, including Russian President Vladimir Putin. With that being said, it’s not accidental, that Putin is mentioned several times in the document.
 
Publication date: 27 August 11:35 AM