The S&P 500 index in November successfully stormed new historic highs, adding 3.4% for the month. It can be said that the economic data published in November improved slightly, or at least stopped deteriorating. True, this is to a much greater extent the United States than other major economies. Almost none of the analysts are already expecting a recession in America in 2020. In China, meanwhile, leading indicators continue to indicate a further slowdown, which adds trump cards to the US side in negotiations on a new trade agreement with China. At the same time, everyone should note the growth of protest sentiments almost all over the world, which indicates growing political risks. For two months, powerful protests with far-reaching political and economic consequences shocked Chile, Colombia, Bolivia, Lebanon, Iraq. Amnesty international claims hundreds of killed protesters in Iran in a few days while the internet was turned off throughout the country. Many months of protests in Hong Kong will continue. Against this background, the main Ukrainian political risks are perhaps behind. At least that is exactly what foreign portfolio investors think, whose currency inflows for the purchase of OVDPs have secured the leading position of the hryvnia in strengthening this year and reducing inflation to 5%, while the OVDPs have already fallen to about 12%.
December is likely to be rich in important news and, accordingly, markets will be volatile. Investors are waiting for the results of negotiations between the US and China on a trade deal, since another increase in duties is planned for December, and Trump’s presidency is coming to an end. Also, the impeachment process of the US president can swing the markets. In Ukraine, we look forward to progress in negotiations with the IMF, the results of negotiations on the Donbass and the transportation of Russian gas. In the meantime, the economy is on a positive wave and growing by about 4%, and we believe that growth is likely to accelerate due to increased lending, increased consumption due to higher incomes of Ukrainians, and of course due to land reform. Although inflows of "hot" money in government bonds increase financial risks in the future - so far their volume is not critical, and as government bonds yield decreases, such inflows will decrease by themselves. Also, a decrease in government bond yields and deposits will lead to increased investor interest in the stock market.
