Brexit and the US trade war with China are almost every day full of headlines in the financial press. The G-20 summit in Argentina did not bring a breakthrough in relations between the United States and China, but at least delayed the introduction of new duties for 3 months. Under current conditions, this is not enough to calm the markets, and therefore volatility continues to increase. As a result, changes in the S & P 500 index by 2% within the day no longer surprise anyone, and of course such volatility itself is already pulling economic expectations down. As a result, pressure on the head of the US Federal Reserve system is growing sharply to postpone the rate hike. So, if a few months ago, the markets were expecting 3-4 raise rates by 0.25% in 2019, then now the maximum is one. Yes, Fed Chairman Powell himself recently stated that in general the stakes in the US are not so far from “neutral”, i.e. such that they do not stimulate and do not inhibit the economy, therefore, a large increase can not be expected. In the meantime, in Ukraine, the UB index closed November almost unchanged, but the quotations of Ukrainian Eurobonds continued to fall, due to which Neftegaz even had to postpone the placement of new Eurobonds.
We expect that in December, the new IMF program for Ukraine will still be approved, and this will become a local positive for local financial markets. Then the need for funding for 2019 will be closed, and investors will focus entirely on the outcome of presidential and parliamentary elections. It is not yet necessary to expect a reduction in global volatility, but as we have repeatedly written, with continued cooperation with the IMF, Ukraine is largely protected from a negative external background. As for the elections, although it is difficult now to predict who will become president, it is clear that the future leader’s field of action will also be limited by the demand of creditors on the one hand, and aggressive actions of the Russian Federation on the other, so you should not wait for decisive changes in Ukrainian politics. However, after the elections, political uncertainty will subside and some acceleration of the economy is possible. Like for example, in 2010-2011, when after the victory of Yanukovych in the elections, the UB index for the year added 70%.
