Ukraine…the long view (part 1)
While the perception in “the street” and in boardrooms is for more economic pain, there are some bright spots. Moreover, there is a consensus that Ukraine will continue to grow as well as transition to a brighter future. The well respected ERSTE Banking Group (www.erstegroup.com) chimes in:
“The steel industry will continue to invest heavily in production efficiency programmes. The local steel industry has great potential for cutting production costs, as Ukraine has one of the world’s biggest layers of iron ore and large layers of coal. The recent introduction of steel price futures on the London Metals Exchange (and plans to introduce them on the New York Mercantile Exchange) will bring new hedging possibilities for steel producers. The banking system will also strengthen after a period of consolidation and an increase in the share of foreign capital. In the future, Ukraine will remain influenced by cyclical downtrends in steel demand, but will be much more resilient to them, than it is now (compared to just several years ago). “GDP growth will return to its potential growth of 5-6% in 2010, while inflation is likely to come down to a single-digit figure,” conclude Erste analysts”
The key for investors, will be reassessment of risk relative to other markets. It is my view, Ukraine offers attractive returns over the longer term given the momentum of structural reforms that the current economic situtation may in fact, accelerate. The real question is whether Ukraine will be transparent enough for investors to accurately measure this to their advantage.
Anton Olff
Technorati Tags: GDP, ERSTE Banking Group, inflation, steel industry, Ukraine
Tags: ERSTE Banking Group, GDP, inflation, steel industry, ukraine
