As many others I consider a stock market index of a country a reliable mood indicator. It gives some indication of what is likely to happen next. Money always moves first.
On Friday, Sep 5th stock trading in Kiev was suspended. PFTS - the local stock market index -dropped 7% in one day. For the last quarter PFTS dropped 29.1% and such fall earned PFTS a silver medal for the 2nd worst performing stock index in the world. (Gold medal goes to China Mainland Index). CDS on Ukrainian government bonds moved over 501 mark.
Yesterday's index drop is not triggered by Cheny's visit and talk about Ukraine's need to move closer to EU and get NATO membership.
It has to do with overbearing neighbouring Mishka bear and unbearably mercurial local politics. For excellent analysis about both check http://www.stratfor.com/.
Like many Ukrainians I do not fear peace-keeping "Black Eagles" on the East boarder. Mishka has a more effective way down his paws. On Aug 29th Russian Economic Ministry committed to abolish conditions for free trading with Ukraine. Under 1993 Russia-Ukraine free trade agreement all goods produced in Ukraine except sugar and alcohol enjoy duty free export to Russia. So Mishka plans (the government has a week to decide) to close Russian market for Ukrainian goods. The bear knows well Ukraine's weakest spots. In spite '93 agreement Mishka triggered few "economic wars" already. In Jan 2006 Russia declared "chicken and cheese war". Mishka found that Ukrainian milk and meat products pose the threat of contagious diseases in Russia. Since Jan 2007 when Mishka mentions "gas" - Ukraine freezes. Not only literally. Ukraine economic fate is tied to oil and gas as Ukraine major export (after grain and sunflowers) is steel. To produce steel this country needs a lot of gas. Until now Mishka and Vladimir supplied gas (with few telling interruptions) at below market prices. But that's due to change. The new gas contract is being negotiated. The guess is not will the price be higher - but will it be "un/bearably" higher.
In Ukraine (as in many other places) money rules. Ru$$ia i$ flu$hed with $$$$$$$. And annoyed with what it calls "the encirclement strategy" employed by the US/West.
Since Peter the Great the Russian doctrine is based to ensure access to the Baltic in the North and the Black Sea in the South. Peter won access to the Baltic. Cathrine's soldier Potemkin ensured access to the Black Sea. Russia will not allow even contemplating a loss of access to the Black Sea and Sevastopol naval base - which population is 72% Russian.
On Friday, Sep 5th stock trading in Kiev was suspended. PFTS - the local stock market index -dropped 7% in one day. For the last quarter PFTS dropped 29.1% and such fall earned PFTS a silver medal for the 2nd worst performing stock index in the world. (Gold medal goes to China Mainland Index). CDS on Ukrainian government bonds moved over 501 mark.
Yesterday's index drop is not triggered by Cheny's visit and talk about Ukraine's need to move closer to EU and get NATO membership.
It has to do with overbearing neighbouring Mishka bear and unbearably mercurial local politics. For excellent analysis about both check http://www.stratfor.com/.
Like many Ukrainians I do not fear peace-keeping "Black Eagles" on the East boarder. Mishka has a more effective way down his paws. On Aug 29th Russian Economic Ministry committed to abolish conditions for free trading with Ukraine. Under 1993 Russia-Ukraine free trade agreement all goods produced in Ukraine except sugar and alcohol enjoy duty free export to Russia. So Mishka plans (the government has a week to decide) to close Russian market for Ukrainian goods. The bear knows well Ukraine's weakest spots. In spite '93 agreement Mishka triggered few "economic wars" already. In Jan 2006 Russia declared "chicken and cheese war". Mishka found that Ukrainian milk and meat products pose the threat of contagious diseases in Russia. Since Jan 2007 when Mishka mentions "gas" - Ukraine freezes. Not only literally. Ukraine economic fate is tied to oil and gas as Ukraine major export (after grain and sunflowers) is steel. To produce steel this country needs a lot of gas. Until now Mishka and Vladimir supplied gas (with few telling interruptions) at below market prices. But that's due to change. The new gas contract is being negotiated. The guess is not will the price be higher - but will it be "un/bearably" higher.
In Ukraine (as in many other places) money rules. Ru$$ia i$ flu$hed with $$$$$$$. And annoyed with what it calls "the encirclement strategy" employed by the US/West.
Since Peter the Great the Russian doctrine is based to ensure access to the Baltic in the North and the Black Sea in the South. Peter won access to the Baltic. Cathrine's soldier Potemkin ensured access to the Black Sea. Russia will not allow even contemplating a loss of access to the Black Sea and Sevastopol naval base - which population is 72% Russian.
For those not quite familiar with Crimea - it was donated to Ukraine Soviet Socialist Republic by Khrushchov in 1954. Since Ukraine independence suzerainty of Crimea is subject of heated debate.
Russians will not repeat embarrassment of 2004. If - following collapse of coalition government this week - early election take place, my guess is that a party backed by Mishka is most likely to win.
Russians will not repeat embarrassment of 2004. If - following collapse of coalition government this week - early election take place, my guess is that a party backed by Mishka is most likely to win.
September will countinue to be exciting month. Not only beacuse at the end of it FIFA has to finally decide if Ukraine is on its way to be ready to co-host the football championship in 2012.
In the meantime Mishka taps his paws...
Credit: the amazing photo of the bear is downloaded from www.firstpeople.us
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