Yevhen Pentsak's advice: “It’s leveling out but that is very different from returning to …” upward movement

Yevhen Pentsak (50) 10 August'09

Tags: Yevhen Pentsak, investments, fund market, investment portfolio, currency, exchange rate, IMF

The headlines of the week: leading economists’ cautious forecast of near end of crisis, world banking sector so far in need of help, Ukrainian stocks in expressly gaining market

Steady talks about the financial crisis likely to end were heard in the community of most influential world economists as early as Aug 2009. Paul Krugman, the Nobel Memorial Prize in Economics winner, in particular, stated August, 9 2009 in Kuala Lumpur: “My guess is that we’ve bottomed out now, that August was probably the trough month… What we’re seeing is stabilization,” Krugman said. “We’re seeing that the great freefall and the nosedive seems to be over. It’s leveling out but that is very different from returning to normality”. The Princeton University economist was highly appreciative of Federal Reserve Chairman Ben S. Bernanke: “But he’s been really very good in the sense that it’s really very hard to see how anyone could have done more to stem this crisis”. Though, this year’s Nobel Prize winner in economy, Joseph Stiglitz, contended that this road has many dents and there are quite a number of problems relating to commercial realty, high bankruptcy level well expected in mortgage market and the commercial banks issue remaining obscure. Due to Stiglitz, Bernanke's reappointment should be the subject of a "national debate" and as soon as possible, at that. I wonder what the noted world economists might say about our National Bank executive, though. To me, the latter is quite an erotetic assumption.

I believe, the fact that global economy is likely to be bottoming out of crisis seems quite appealing to Ukrainian export-oriented industries. The rate of hard currency inflow will definitely grow; metallurgy, chemistry, agricultural and food sectors will sure manage to readjust their corporate debts.

As to the banking sector the forecast should be conservative as well as heavily leaning to negative. Nationalization or recapitalization of the most problematic domestic banks - “Nadra” and “Ukrprombank” - is supposed to be the crucial signal that the issue was taken seriously.

The government is in bad need of funds to support the current level of budget deficit, to secure the Pension Fund payments and so on. In line with that the short-term high-yield (23-27%) government bonds have been issued. As far as credit risks are concerned, it stands well to reason that the state is a much more reliable partner than the business community with its excessive profit-loss risk. Although, no one can state at the moment that investing into state bonds is less risky than into the corporate sector in this country, hey? It has established historically that the time to gather stones is sure to come; so far no one can say for sure what sorts of stones there are to be collected by the government. Or else, the one to gather the stones will be the next government team? None of the state programs has ever been realized, nor any considerable effort put out into fighting the recession, nothing of the kind was observed as the crisis escalated. It is but reason that the issues of Pres and his Secretarial office and the NBU were to be faced in the meanwhile. But that's what politics is all about - finding compromises, in the first place. The current governmental policy has only proved to provoke Hryvnia devaluation and to cause the related apprehensions (whereas the current “on paper” statistics rather indicates the deflationary rate at 0, 1%).

Realty market remains slack. No early restoration of lending is expected while developers (in view of a prospective rush) remain reluctant to reduce prices for homes. And that’s despite Paul Krugman’s “It’s leveling out but that is very different from returning to normality”?

We still keep holding to the following portfolio mix:

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

Investment community should definitely wait and see the NBU grow bearish and then rebalance the portfolio in favor of hard currency to look safely forward to autumn rally.

As far as the international investments are concerned I do recommend that Indian and Chinese steel industries would be considered, due to the start of their recent rapid growth.

Curious though it may seem but, in fact, Pythagoras' theorem (“in any right triangle, the area of the square whose side is the hypotenuse (the side opposite the right angle) is equal to the sum of the areas of the squares whose sides are the two legs (the two sides that meet at a right angle)” seemed to be quite familiar to the inhabitants of the Tigris-Euphrates valley at times as early as the year 2000 B.C. Nonetheless, only the Greeks were to give the answer to “Why”-question which was valued by them as a much more important one than a “What”- question.

I wish the readers would promptly find their answers to the sort of question like “Why do I live like this?” and once the answers been found you go and try to answer the perrenial “What is there to be done?”

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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:

ML 11/08/2009 20:59

Які мотиви для Нацбанку при грі на пониження?
Знову комісійні ?
В кінці липня банк згідно нашої заявки купував
валюту для розрахунку по ЗЕД контракту.
Так от , банк купив долар у Нацбанку по 7,75,
а з нас зняв комісію спочатку 3,05%, потім 3,4% !
Думаю така велика комісія потрібна, щоб
"посіяти" де треба. (Для довідки - комісія згідно
угоди про касове обслуговування 0,5%).
Може комусь не цікаво, то перепрошую.

pentsak@kmbs.com.ua 12/08/2009 18:33

[ML]: Дякую за коментар.
Комісія справді величезна, але я мав на увазі інше. НБУ хоче провчити "клятих" спекулянтів, що скуповують валюту. Простий трюк - спочатку всі представники НБУ у своїх повідомленнях дають зрозуміти про слабкість української економіки та про можливість девальвації, якщо не зміниться політика уряду. Уряд, у свою чергу критикує НБУ і його керівництво. Зрозуміло, що "йде перетягування канату", тобто десь розійшлись інтереси. Чим нижчим буде курс гривні, тим більшої критики зазнаватиме ЮВ у ЗМІ. Тому ЮВ змушена буде піти на якісь поступки у "внутрішній кухні перерозподілу" з ВА і головою НБУ. Тоді НБУ вийде на міжбанк і швидко "зажене" долар до 7,8 грн.
Це лише моя особиста думка, бо інсайду я не маю. Здавати долари ще не рекомендую, якщо долар дотягне до 9 грн. - потрібно здавати.

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