It can be said that the global economic slowdown became more pronounced in July. China is slowing its growth in industrial production, lending, lower and lower economic expectations. Europe is already on the verge of recession, and despite the fact that Brexit has not happened yet, and the likelihood of Britain leaving the EU, without an agreement, is higher. Deteriorating economic expectations also hit the US, where more market players are urging the Fed to cut rates, which was done at the end of the month. However, Fed Powell urged markets not to regard this as the beginning of a new cycle of declines, but to consider the current rate adjustment, which was immediately perceived negatively by the market. However, the S&P 500 closed near historical highs and showed + 1.3% in the month. With worsening economic expectations, investors expect all of the largest central banks of monetary stimulus in various forms. Interest rates around the world continue to fall, which is beneficial for debtors like ours. Ukrainian bond prices have risen, driven by both external and still positive expectations of political news, and demand from non-residents at high interest rates of UAH 16-17 continues to support the national currency.
Zelensky's convincing victory, early parliamentary elections, first secured a single political force for the majority in parliament, removed political uncertainty, and this is likely to unlock some pent-up demand for investment projects in Ukraine. In addition, the Ze team promises to implement land reform as soon as possible, which alone, if properly implemented, can add at least 1% of GDP growth annually. Banks have been rebuilding their capital for the last 10 years after the 2008-2009 losses, and lending can now begin to recover. In other words, Ukraine's economy has every chance to accelerate, and given the slowdown in many other economies, our country will look increasingly attractive to foreign investors, leading, in our view, to capital inflows and rising prices for Ukrainian assets.
