Yevhen Pentsak's advice: strategy “shell game” played with the electorate

Tags: exchange rate, real estate, fund market, Yevhen Pentsak

Headlines of the week: Ukrainian chain of command stuck at the height of absurdity, recapitalization of problem banks - noose is being tightened, world stock markets in stagnation, Ukrainian stocks sagging in view of commodities’ fall, bright future for agribusiness.

Politics: all preparations have been done for presidential elections campaign. None of the candidates is seen busy developing any political line whatsoever or getting teams organized, nor conjuring up anything like party ideology. Bitter controversy between Presidential Secretariat and the Cabinet of Ministers will soon be sustained by IMF mission. Depressing eyes will be the best policy under these circumstances so as to solicit the next tranche. The candidates grow in number, yet none of practical solutions to follow this process. Mudslinging and reciprocal accusations are sure attributes of the process.

One of the candidates in a row – Anatoly Hritsenko - has visited the KMBS recently. It was a nice self-presentation, as a whole, for many good things have been spoken about: energy efficiency, on-going development in production, technological innovations, advanced education, efficient army etc. He insisted on enforcement of a powerful law to fight corruption. From what he was saying I realized that each issue to be settled, every government order in Ukraine fails unless given an appropriate lobby push. High incidence of corruption in the army has become a matter of routine there and illegal land trade being one of the recent renowned cases. Speaking of former governments Anatoly Hritsenko referred to facts of trading national interests at times the negotiations with Gazprom were held. It looks like an ever-lasting story in Ukraine, doesn’t it. It might well be a way out if Hritsenko, Yatseniuk, Tigipko, Lutsenko would combine efforts instead of blaming one another constantly? However, each one has his own range of interests, set of goals, scope of assignments, personal experience and so on.

It’s IMF approach that puzzles me most when I think of the way they are lending money to “adjudicated bankrupts”. Once the claims have been lodged, do exact the results gentlemen, please. Otherwise, quite consciously you are driving Ukraine to ruination. Just imagine, some guy of IMF would have been suggested to lend his own cash – wouldn’t he think twice of what it’s worth for, before taking any steps? What kind of underlying asset or security do they mean while giving a loan? Is it the future generation labor force of Ukraine - they mean - that the bill would be settled with? Should this country last in living under final judgment of elections all the time? Why is there to be a hide-and-seek game played by the government with statistics?

Stocks and banks: summer correction is in full swing and it appears that a decline there will stay till mid august. Gold has dropped $945.00 to $925.00 to follow slight softening of commodity markets. The national bank prohibited hard currency loans with only some minor exceptions. In fact, that might have been done in 2006 to 2008 by means of relevant regulations on currency reserving aimed at underlying the loans. How can the problem of stuck deposits be solved? NBU doesn’t seem to be much worried with that. It’s obvious that problem banks have to be taken through insolvency proceedings, their assets sold off to reimburse the deposited sums. There aren’t grounds for real estate market start moving, actually it keeps stagnating. Bright future’s awaiting agriculture biz. I do not envisage any dramatic changes of dollar and euro rates to hryvnia this month.

We still keep holding to portfolio mix of

  • 35% - UAH,
  • 30% - dollar,
  • 30% - euro,
  • 5% - gold (bar and paper).

Peter Bernstein, a risk-management guru, wrote in his book “Capital Ideas Evolving” that

“… none of us can really tell the future. The risk - as it is perceived of by this world - is nothing but equivocation of someone else’s decisions and the counter decisions taken by us… Market prices are formed on the basis of the information inflow, but the prices themselves convey the information from the informed to the uninformed investors, and sometimes – vice versa”.

It appears that Ukrainian uninformed investors keep their heads down awaiting further decline of realty and new round of bank crisis, as well as feeling ill at ease in the uncertainty of coming elections!

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See also:

Мысли среди недели: индуктивные и дедуктивные методы исследования фондовых рынков

Очень часто мне приходится дискутировать о применимости тех или иных финансовых теорий к текущему анализу рынков, осуществление на его основе прогнозов и инвестиционных решений. Еще чаще мне приходилось наблюдать за спорами теоретиков и практиков на финансовом фундаменте. Меня всегда удивляло, почему они спорят? Ученые и исследователи используют общепринятые модели, описанные во всех классических учебниках, их знает каждый магистр по финансам. Почему выводы этих моделей не нравятся практикам?

Comments:

demitsuria 01/07/2009 11:36

Євгене, як на вашу думку - що буде врешті решт із банком "Надра" та його вкладниками? Рекапіталізують банк чи ні, а може визнають банкрутом, і чи отримають вкладники свої гроші, тощо

changed: 01/07/2009 12:26, reply
ML 02/07/2009 00:31

Стаття сподобалась.
Цікавий погляд на причини, чому нав'язують кредити МВФ тут:
http://knukim.kiev.ua

pentsak@kmbs.com.ua 08/07/2009 15:27


[demitsuria]:
На мою думку "Надра" визнають банкрутом, але будуть "тягнути" з цим рішенням до останнього, бо повертати борги банку за депозитами прийдеться. Зараз НБУ грає з комерційними банками в "одну руку", бо НБУ не хочеться визнавати своєї вини, як регулятора, щодо необдуманого кредитування комерційними банками в іноземній валюті протягом 2006-2008 років.

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