The UX index rose by 1.9% to 1917 points last week, with a major contribution to the gauge gain coming from TurboAtom. The TATM stock rebounded by 20% to UAH 8.40 after investors came to the conclusion that there will be no stock dilution after TurboAtom completes its merger with loss-making state-owned machinery producer ElectroTyazhMash. A formal decision on the merger will be voted on at a special shareholders meeting on Aug 27.
In other UX index stocks, UkrNafta (UNAF) and Raiffeisen Bank Aval (BAVL) were unchanged at UAH 270 and 45 kopecks respectively. Meanwhile, CentrEnergo (CEEN) advanced by 4.2% to close at UAH 10 on the nose. News that the government announced an intervention on the electricity market by promising a lower electricity tariff for households in the winter season appeared to have no impact on the CEEN stock. The Energy Ministry proposed to cut the electricity price for small households that consume less than 250 kWh per month from UAH 1.68 to UAH 1.44 per kWh. This implies that electricity for most of the Ukrainian population will cost just 5.4 US cents per 1 kWh. We view this intervention on the electricity market as clear populist attempt neutralize voter anger about rising energy prices, as natural gas price and petroleum prices have also risen significantly in recent months.
In London trading, Ferrexpo (FXPO) slid 6.9% to GBp 405 as fears of a further correction in iron ore price prevailed among traders. Earlier this month Ferrexpo reported a record high net profit of USD 661mn for 1H21, translating into EPS of GBp 81. This implies that the company’s projected P/E for 2021 stands at just 3.0x. Poultry producer MHP (MHPC) rose by 2.2% to USD 5.68 amid overall positive momentum for Ukrainian agro stocks. Warsaw-listed Kernel (KER) picked up 2.8% to PLN 55.30 and low-liquidity Agroton (AGT) jumped by 10% to PLN 8.50 per share.
On the currency market, the hryvnia remained on the rise, gaining 0.7% to 26.65 UAH/USD. The National Bank intervened with dollar purchases to prevent stronger hryvnia appreciation. The NBU appears to be uncomfortable with a rise in the hryvnia of higher than about 1% in any given week.
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