EAVEX Weekly

January 24, 2017

Kyiv-listed stocks extended their rally last week, rising to new 12-month highs not seen since late 2015. Traders were further encouraged by a report that consumer optimism in the country is at the best level since the summer 2014, before the active phase of the Donbass war. GfK Ukraine’s “Index of Economic Expectations” rose significantly in December. Meanwhile, the IMF is demanding more structural reforms from Kyiv in exchange for further loan disbursements. The tough conditions include a long-delayed reform that would allow a free market for land sales, gradual increases in the retirement age, and the phasing out of tax breaks, including a popular one for small businesses. For the moment, the IMF’s requirements look politically difficult to implement, but the USD 5.5bn Ukraine stands to receive this year may become enough to push the Volodymir Groysman-led government into bold action.