Heroes of Ukraine

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

Monday, 18 June 07:43 (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 »
 

Trump Turned G7 Into G6+1

The British media are criticizing Donald Trump's stance and behavior during the recent G7 summit in Quebec, Canada. 

Publication date: 13 June 12:02 PM

G7 Is Ready to Impose New Sanctions on Russia

In the final communique of the recent G7 summit in Quebec, Canada, there is warning for Russia. In particular the G7 warns Moscow that they are ready to impose even more sanctions on Russia in case of further aggression. 

Publication date: 12 June 11:44 AM

George Soros: New Global Crisis Is Coming

While analyzing the current geopolitical situation in the global arena, many experts warn us about serious threats. For example, famous billionaire and financier George Soros predicts another global crisis in the near future. Even though his predictions are controversial at best, many representatives of the international community take his words for granted.

Publication date: 01 June 12:24 PM

Donald Trump Is Not going to Meet with Kim Jong Un

U.S. President Donald Trump is reported to have been canceled his meeting with North Korean leader Kim Jong Un. This is confirmed by the corresponding official press release published in the White House’s official account.

Publication date: 24 May 11:49 AM

How to become a European bank co-owner?

Do you want to get absolutely legitimate access to the EU’s banking system by becoming a co-owner of a European bank to have personal and corporate accounts in your own financial institution? It’s like having a VIP card by VISA or MasterCard with huge discounts worldwide…

Publication date: 10 April 08:06 AM

Goldman Sachs Analysts Have Found Global Economic Slowdown

At the point, most representatives of the international expert community are pretty sure that the global economy has been growing confidently for some time. However, Goldman Sachs analysts claim that the global economy is starting to slow down.

 

In February 2018, 7 out of 10 base components of Goldman Sachs' Global Leading Indicator (GLI) dropped a bit. The bullish momentum started weakening and slowed down from 0,249% down to 0,234%. These are the weakest figures since March 2016.

Publication date: 30 March 01:25 AM

U.S. Fed Denies 4 Interest Rate Hikes This Year?

According to Finanz, the accelerated economic growth in the United States may force the federal Reserve to change their mind about raising interest rates 4 times this year.
 
Publication date: 29 March 11:19 AM

Putin Challenges USA

Vladimir Putin has recently presented new Russian weapons. Western experts have been busy discussing them ever since. According to several observers, this move literally means that Putin has challenged Washington.

Publication date: 29 March 10:06 AM

Chinese Renminbi’s Global Currency Status Will Open Chinese Economy to the World

The Chinese government is planning to turn the Chinese Yuan into a global reserve currency in order to make the national economy more open to the rest of the world.  This was confirmed by the People’s Bank of China.

Publication date: 28 March 09:16 AM

Will the USA Impose New Sanctions on Russia in Advance of the Russian Presidential Election 2018?

Not so long ago, United States Secretary of the Treasury Steven Mnuchin promised to announce a new round of the sanctions against Russia within the next 30 days. The question is whether the United States will manage to root against Putin once again before March 18th?

Publication date: 09 March 12:41 AM