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					UNIAN Stock Market
                        Ukrainian Independent News Agency (UNIAN) founded in March 1993.
                         General Director Oleh Nalyvaiko. Chief Editor Oleksandr Kharchenko.
         Editor of the issue Michael C. Duane. Reference to UNIAN is obligatory during use of its materials.
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17 June 2008, Tuesday, №93
NBU’s Official (Discount) Rates for Banking Metals, June 17, 2008

Hryvnias per 10 troy ounces

959 XAU 10 Gold – 41941.15 (June 13 – 42293.09)
961 XAG 10 Silver – 791.74 (June 13 – 805.33)
962 XPT 10 Platinum – 98590.83 (June 13 – 98056.86)
964 XPD 10 Palladium – 21261.83 (June 13 – 20679.32)
According to the NBU

NBU’s Official Exchange Rate, June 17, 2008

Hryvnia to international currency

100 USD - 485.4300 (June 13 – 485.4300)
100 EUR – 744.4554 (June 13 – 748.3874)
10 RUR – 2.0504 (June 13 – 2.0504)
According to the NBU

Stirol Increases Ammonia, Carbamide Production

Sales hit 2.15 billion hryvnias, January-May

Stirol increased its ammonia production 3.5 percent year-on-year between January and May, seeing a total
output of 640,159 tons, according to the company’s press-service.
Carbamide production grew by 1.6 percent over the same period, climbing to 365,159 tons; the production of
sodium nitrate grew 2.5 percent, to hit 8,435 tons; polystyrene production gained 27.8 percent, to reach
18,431 tons. The output of paint-and-lacquer materials soared by 51.5 percent to total 596.9 tons; the
production of medicines rose by 45.6 percent to reach 498.59 million units; the production of sulfuric acid
more than doubled, reaching 97,438 tons.
Stirol’s sales hit 2.15 billion hryvnias between January and May, increasing 30.5 percent year-on-year.
UNIAN reference: Established in 1933, VAT Concern Stirol, based in Horlivka, Donetsk region, is Ukraine’s
leading producer of mineral fertilizers, polymer materials, and byproducts. It produces over 3 percent of the
world’s ammonia and carbamide export. Stirol is Ukraine’s only producer of foaming polystyrene. It also
produces paint-and-lacquer materials, non-organic acids and salts, biological fodder additives for animal
husbandry and medical products.
As of December 2006, TZOV Stirolkhiminvest (Horlivka) owned 50.01 percent of the concern’s stock. The
rest of shares belonged to individuals.
On Feb. 2, 2008, the Antimonopoly Committee allowed Dotterbloem Holding B.V. (the Netherlands), an
affiliate of Stirolkhiminvest, to purchase over 50 percent of Stirol’s stocks.
In 2007, the concern boosted EBITDA by 18.1 percent to 364 million hryvnias. Last year, the company’s
EBIT grew by 22.2 percent from 229.06 to 280 million hryvnias. Stirol’s gross revenue climbed 627.16
million hryvnias (up 18.6 percent) in 2007.

Gas Transit through Ukraine Grows, January-May

Climbing 24.7 percent yoy

Gas transit via Ukraine increased 24.7 percent year-on-year between January and May, while oil transit
through Ukraine’s pipelines fell 16.2 percent, according to the State Statistics Committee.
The total amount of oil transported via Ukrainian pipelines dropped 20.9 percent yoy over the same period.
The total volume of gas transported grew 16.8 percent yoy.
The Committee provided no absolute figures on the total amount of oil and gas that had been transported.
According to the Committee, in 2007 oil transit via Ukraine jumped 19.9 percent and gas transit dropped
10.4 percent, as compared with 2006. The total volume of gas transportation fell 8.6 percent, and the total
amount of oil transported through pipelines grew 13.4 percent.
UNIAN reference: DK Ukrtransgaz, an affiliate of NAK Naftogaz Ukrainy, controls all Ukrainian gas
pipelines, while VAT Ukrtransnafta operates the country’s oil pipelines.
MPP Feniks’ Bond Issue Rated uaCCC

Indicating very low creditworthiness

Credit-Rating, a nationally recognized credit rating agency in Ukraine, reported that it had assigned a long-
term credit rating of uaCCC to the upcoming issue of (A-series) registered interest bonds by MPP Feniks,
based in Chernivtsi. The bonds, worth 18 million hryvnias, will mature in four years.
The company’s primary business is real estate investment and development.
Currently, Feniks is constructing an apartment house in Chernivtsi.
In the course of its analysis, Credit-Rating considered the issuer’s financial statements for years 2005 through
2007, as well as the internal information provided by the issuer.
An issuer or a debt instrument with uaCCC rating has very low creditworthiness when compared to other
Ukrainian issuers or debt instruments. There is a potential probability of default.
Factors supporting the credit rating:
- The issuer has some experience in residential construction: it has already built a 2,500 square meters
apartment house in Chernivtsi. Another apartment building is 95 percent complete.
Factors limiting the credit rating:
- The amount of the proposed bond issue (18 million hryvnias) far exceeds the issuer’s EBITDA (900,000
hryvnias).
- Feniks’ economical and financial performance has been uneven in the recent years. The company has no
development strategy for the period of bond circulation.
- The regulations concerning real estate development and financing are vague and subject to change, as is the
taxation of development projects.

Ferrexpo Included in FTSE 100 Index

Ranked among Top-100 U.K. companies

Ferrexpo, a Swiss-registered miner, along with Invensys engineering company, Petrofac oilfield servicing
company, and Drax Group, a power producer, were included in the FTSE 100 index to replace Alliance and
Leicester, Persimmon, Home Retail Group and Tate & Lyle, according to FTSE Group’s press-service.
The FTSE 100 index comprises the 100 most highly capitalized blue chip companies, representing
approximately 81% of the UK stock market. It is used extensively as a basis for investment products, such as
derivatives and exchange-traded funds.
UNIAN reference: Swiss-based Ferrexpo Company, owned by Ukrainian billionaire Kostyantyn Zhevaho,
produces and sells iron ore pellets. It controls 85 percent of Poltava Mining, one of Ukraine’s biggest pellet
producers.
In 2007, Ferrexpo’s revenue increased by $150.91 million, or 28 percent year-on-year, to $698.22 million. Its

EBITDA soared by 65 percent in 2007 to reach $246 million.

Vinnytsya Looks for Underwriter to Place F-Series Bonds


Bond yield expected at no more than 18 percent


The Vinnytsya city council has announced a tender to choose a bank which will manage its F-series
municipal bond issue worth 10 million hryvnias. The head of the city council’s financial department Nataliya
Lutsenko reported the development.
Vinnytsya looks for a bank which will offer the lowest interest rate. The city hopes that the bond yield will be
no higher than 18 percent per annum. The tender has been scheduled for June 20.
Earlier, UNIAN reported that the Vinnytsya city council had decided to issue F-series municipal bonds worth
10 million hryvnias, with a maturity of three years and five months.
So far, Vinnytsya has placed 5 series of its municipal bonds worth a total of 35 million hryvnias: A-series
bonds for 8 million hryvnias were issued on June 15, 1996; B-series bonds for 8 million hryvnias, on Aug.
15, 2006; C-series bonds for 4 million hryvnias, on Nov. 15, 2006; D-series bonds for 6 million hryvnias, on
Aug. 1, 2007; E-series bonds for 9 million, on Oct. 1, 2007. The bond proceeds will be used to reconstruct
the city’s roads.

Expert: Ukrainian Economy to Grow Despite S&P Downgrade

Banking sector to help weather the storm

Standard & Poor’s recent decision to downgrade Ukraine’s credit rating will not have a significant, negative
affect on Ukraine’s economic situation, according to Oleksandr Shkurpat, an analyst with Foyil Securities.
Foyil projects Ukraine’s economy will grow 6.5 percent in 2008, expecting the country’s burgeoning banking
sector to sustain the higher costs of foreign loans as well as to generate the resources needed to offset the
current account deficit.
Shkurpat believes that between 2008 and 2009, inflation will be contained by strict monetary policy and a
more flexible exchange rate. “However, the government’s target inflation rate of 15.3 percent will be
exceeded, and inflation will hit 21 percent this year,” Shkurpat said.
“The downgrade of Ukraine’s rating will make external borrowings more expensive both for the government
and for individual companies. This may cause a money outflow from Ukraine’s financial account in 2009,”
Shkurpat added.
Standard & Poor’s Ratings Services reported on Thursday that it had lowered its long-term foreign currency
sovereign credit rating on Ukraine to B+ from BB-, and its long-term local currency rating to BB- from BB.
The outlook was changed to stable. Among the reasons for the rating revision, S&P cited the Ukrainian
government’s inability to counter rising inflation.

NBU Official: Inflation May Drop into Single-Digits within Two Years

If government can institute sound economic policy

Ukraine may return to single-digit inflation within two years if the country’s government is able to adopt a
sound economic policy, according to the National Bank’s executive economic director Ihor Shumylo. His
statement came during his interview with the Weekly Mirror (Zerkalo Nedeli) newspaper (#22 of June 14-20,
2008).
“We believe that    with a balanced economic policy it will be possible to reduce inflation to single-digit
numbers within the next two years – even if gas prices soar again in 2009, which would drive up all kinds of
state-regulated tariffs. However, a lot of political courage and responsibility will be needed to admit the bitter
truth, to set realistic goals, and to concentrate the efforts of all branches of authority on curbing inflation and
ensuring price stability, which is the essential condition of sustainable economic growth,” Shumylo said.
He also said that a restrictive monetary and exchange rate policy would reduce inflation between 2 and 4
percentage points this year, while causing minimal damage to economic activities. “The strengthened hryvnia
will have a minimal impact on the current account balance. The negative effects suffered by exporters will
be offset by cheaper imports of commodities – like gas and other fuels – used by exporters for their
production. Imports will see only a minimal growth, as consumer demand declines.”
Shumylo said he agreed with the experts who believed that prices would grow at least 20 percent in 2008. “It
will be difficult to limit price growth at this level, given the current inflationary pressure and the existing
external challenges – e.g. oil and metal hikes – but this task can be considered fairly realistic. Inflation of 20
percent may become a target indicator for the government.”

Concorde Recommends Purchasing Stock in Coke Companies

Yasinovksy, Bagleykoks, Avdeyevka prove most attractive

Concorde Capital recommends buying shares of Yasinovsky Coke (PFTS ticker – YASK, target price $2 per
share), Bagleykoks (PFTS ticker – BKOK, target price $0.3 per share), and Avdeyevka Coke (PFTS ticker –
AVDK, target price $7.6 per share).
According to Concorde’s analytical report obtained by UNIAN, by-product coke plants performed well
during the first quarter as the situation in the coking industry was rather favorable. Yasinovsky Coke posted a
net profit of $15.9 million (a net margin of 12.2 percent), showing an increase of three times year-on-year.
Bagleykoks, following its acquisition by Evraz, posted $7.4 million in first-quarter net profit (net margin of
12.3 percent), compared to $13.9 million losses during 2007. Avdeyevka Coke’s net profit reached $56.4
million and its EBITDA hit $86.4 million during the first quarter (a margin of 13.5 percent and 20.7 percent
respectively), which were record numbers for Ukraine’s coke industry.
Concorde expects that the positive situation on the coke market will persist, and the financial performance of
coke producers will improve in the coming months.
UNIAN reference: VAT Yasinovsky By-Product Coke Plant, based in Makeyevka, Donetsk region, produces
blast-furnace coke, nut coke and breeze coke along with some chemical products (coal-tar pitch, ammonium
sulfate, benzene etc). According to the Securities and Stock Market Commission, VAT Chervonoarmiyska
Zakhidna Mine controls 9 percent of Yasinovsky Coke, ZAT Donetskstal owns 31.1 percent, TOV SAVI has
11.3 percent, and TOV Investrozvytok, 33.3 percent. Yasinovsky Coke’s statutory fund stands at 83.4 million
hryvnias.
VAT Bagleykoks By-Product Coke Plant, based in Dniprodzerzhynsk, Dnipropetrovsk region, processes coal
and raw benzene on give-and-take basis, and produces blast-furnace coke. On Dec. 13, 2007, Lanebrook Ltd,
Evraz Group’s majority shareholder, purchased a 93.74 percent stake in Bagleykoks from Ukraine’s Privat
Group.
VAT Avdeyevka By-Product Coke Plant, a member of Metinvest Group, is the biggest coking plant in
Europe. It produces over 30 types of coke and chemical products. In 2007, the company produced 3.03
million tons of metallurgical coke, a 309,100 tons or 11.4 percent increase over the year before.

NBU Plans to Continue Increasing Interest Rates

Policy aimed at curbing inflation

The National Bank of Ukraine plans to continue increasing interest rates as it attempts to curb the country’s
rampant inflation, according to the NBU executive economic director Ihor Shumylo. His statement came
during an interview with The Weekly Mirror (Zerkalo Nedeli) newspaper (#22 of June 14-20, 2008).
“The NBU’s anti-inflation policy has a dual purpose: to slow rising prices and to do so without negatively
affecting the economic growth and financial stability of the banking sector. To achieve this result, the NBU
has been employing and will continue to employ the entire range of available instruments, including
increasing the discount and overnight rates, higher capitalization requirements towards banks, and different
money neutralization measures,” Shumylo said.
Shumylo said that growing inflation had forced the NBU to adopt a tougher monetary policy as far back as
late 2007.
“We must admit that the government’s administrative machine was too ineffective both in developing and
implementing anti-inflation measures. It was only under the NBU’s pressure that the government made more
rigorous fiscal commitments and pledged to reconcile the rising social standards with the actual growth of
labor productivity. However, policies aimed at developing transparent competition, improving the quality of
products and saturating the domestic market – the policies to be implemented by the government ministries
and the Antimonopoly Committee – have been outlined too roughly and too generally. The steps taken by the
government on product markets turned out to be rather clumsy and were perceived as administrative
intervention,” Shumylo concluded.

NBU Official: Government Actions Run Counter to Anti-Inflation Policy Plan

Serious steps must be taken to address inflationary woes

The Ukrainian government’s anti-inflation measures are inadequate and run contrary to the anti-inflation
policy plan developed in cooperation with the National Bank, according to the NBU’s executive economics
director Ihor Shumylo. His comment came during an interview with the Weekly Mirror (Zerkalo Nedeli)
newspaper (#22 of June 14-20, 2008).
Shumylo said that the key to curbing inflation was reducing budget expenses to the 232 billion hryvnias
provided for in the 2008 state budget. He said that neither the government’s nor the president’s attempts to
boost the budget expenses this year would contribute to real economic growth. He also said their measures
would not increase the real income of the population. Instead, they would only increase the inflationary
pressure.
“All above-plan budget revenues should be used to reduce the budget deficit and to maintain it at 1 percent of
the GDP. All unexpected privatization revenues should be accumulated on a separate account and used for
investments in 2009,” Shumylo stressed.
The official admitted that the anti-inflation policy plan developed by the government and the NBU could not
solve the inflation problem completely. “The plan is too lax when it comes to budget expenditures and offers
no means of satisfying the growing demand for goods and services,” he said.

ZAT Halychyna’s Bonds Listed on PFTS

Ticker – OGLCHC

ZAT Halychyna’s (C-series) registered interest bonds have completed the listing procedure and have been
included in the tier II PFTS list (ticker – OGLCHC), according to the PFTS press-service.
On June 17, 2008, PFTS and Halychyna signed a deal on the bond listing.
On April 25, 2008, UNIAN reported that Credit Rating, an independent rating agency, had assigned
Halychyna’s (C-series) bonds a rating of uaBBB. The bonds, worth 30 million hryvnias, will mature in three
years.
UNIAN reference: ZAT Halychyna, based in Radekhiv, Lviv region, was founded in 1998. Its core business
includes the production and sale of whole milk products, as well as skim-milk powder, butter and hard
cheese.

Expert: Market Likely to Continue Correction This Week

Following last week’s record lows

The Ukrainian stock market’s correction will likely continue through this week, according to Anastasiya
Sergiyenko, an expert with Foyil Securities.
“Last week, sales dominated the market as investors showed an unwillingness to enter the market at current
price levels,” she said.
The PFTS bottomed out on Friday, June 13, following last week’s uninterrupted slide. By week’s end the
market had hit a record low, closing 30 percent below the levels seen in December 2007. On Friday,
investors sold-off metal, machinery and banking stocks amid moderate trading activity.

Germany’s Merkel Supports Closer Ties with Ukraine

Endorses joint Polish-Swedish initiative “Eastern Partnership”

German Chancellor Angela Merkel has given her “full support” to a joint Polish-Swedish project intended to
foster closer ties with Ukraine, Georgia, Moldova, Azerbaijan, and Armenia. According to Deutsche Welle,
Merkel’s statement came in Gdansk during a joint press-conference with the Polish Prime Minister Donald
Tusk.
“I think closer ties with our eastern neighbors would be of great use to all of us. On Friday [June 20], we will
ask the European Commission for concrete proposals to ensure that this initiative creates concrete projects,
rather than mere titles,” Merkel said.
Tusk told reporters that “Poland’s efforts to implement the Eastern Partnership initiative are nearing a very
successful completion” and that the idea would become a reality during next sitting of the European Council,
scheduled for June 19-20.
Earlier, UNIAN reported that during the end of May both Poland and Sweden proposed that the EU establish
a new Eastern Partnership organization that would include Ukraine, Moldova, Georgia, Armenia, and
Azerbaijan, as well as 27 EU member states.

Road Clear for Permanent EBRD Office in Ukraine

After Yushchenko signs ratified cooperation agreement into law

Ukrainian President Viktor Yushchenko has signed a new law which ratifies a cooperation agreement
between Ukraine and the European Bank for Reconstruction and Development, according to the presidential
press-service. The treaty allows the EBRD to establish a permanent representative office in Ukraine.
UNIAN reference: The Ukraine-EBRD cooperation treaty was signed in London on June 12, 2007. The
Verkhovna Rada ratified the document on June 4, 2008.

Expert: Ukraine’s Grain Exports May Hit 18 Million Tons for 2008-2009

Sales projected to approach $34.5 billion

Ukraine’s export of three basic grain crops – wheat, barley, and maize – may reach 18 million tons for the
2008-2009 marketing year, including several million tons which are being hastily exported at present,
according to “Agriculture” Analytical Agency announced the forecast.
Export sales of Ukraine’s agricultural produce – including grain, animal and vegetable oils, pressed pulp, and
finished food products – will total at least $13 billion for the 2008-2009 marketing year. The total production
of Ukraine’s agriculture may be worth nearly $34.5 billion for 2008-2009.
According to an earlier UNIAN report, the Ukrainian Grain Association projects that Ukraine’s grain exports
will reach 13 million tons during the 2008-2009 marketing year, which runs between July 2008 and July
2009.
“During the next year, we may export 7 million tons of wheat, 4 million tons of barley, and 2.5 million tons
of maize, according to preliminary estimates,” said UGA’s President Volodymyr Klymenko. He also said
that the export of rape may hit 2 million tons.


Expert: PFTS Reforms to Improve Liquidity, Prevent Stock-Tampering
Regulations toughened for maximum spreads, minimum lots

New securities trading rules for the PFTS should help bolster liquidity and limit the possibility of price
tampering, according to Ineko-Invests CEO Oleh Morkva.
Last week, the PFTS trading committee decided to toughen its regulations concerning maximum spreads and
minimum lots offered on the market. “However, we should not expect that the improved trading environment
will restore investment activity on the Ukrainian market before the public authorities have regained investor
confidence. Ukraine’s monetary and investment policy must also become more consistent and more
predictable,” Morkva added.
Ukrainian stocks have been sliding rapidly since the beginning of June amid meager investor demand, losing
all of May’s gains. “The sudden revaluation of the hryvnia in the second ten days of May, as well as sparse
hopes for a speedy transition to positive trends either in Ukraine’s political life or in the economy, exerted
psychological pressure upon potential investors and hampered the country’s investment activity.”
According to a previous UNIAN report, the PFTS council has adopted new rules concerning maximum
spreads and minimal lots. The maximum horizontal spread for first-tier stocks was set at 5 percent, 15
percent for second tier stocks, and 100% for non-listed stocks. The maximum vertical spread for first-tier
stocks was set at 5 percent, for the second-tier stocks, at 10 percent, and for non-listed stocks, at 15 percent.
The minimum trading lot for the first-tier stocks was set at 50,000 hryvnias, 25,000 hryvnias for second-tier
stocks, and 10,000 hryvnias for non-listed stocks.

Stirol Completes REACH Pre-Registration

Becoming first Ukrainian chemical company to register

VAT Stirol Concern has completed the pre-registration of its products under the EU Regulation Concerning
Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), according to the company’s
press-service.
The regulation, adopted in 2007, stipulates that all chemical substances manufactured, imported, or marketed
in the EU in amounts over 1 ton per year should be registered with the European Chemical Agency (ECHA).
After 2010, all non-registered chemicals will be banned in EU member states. In order to manufacture,
import, and market a substance during the transitional period, the producers must pass a preliminary
procedure – pre-registration – that will take place between June 1, 2008 and December 1, 2008.
On June 1, Stirol has pre-registered with ECHA its ammonia, carbamide, sodium nitrite and nitrate, sulphuric
acid, styrene, formaldehyde, pentane and isopentane, and titanium dioxide.
“Stirol has become Ukraine’s first chemical producer to successfully complete the pre-registration procedure.
According to ECHA, it has also become the first company worldwide to pre-register its sodium nitrite and
nitrate, sulphuric acid, styrene, formaldehyde, pentane and isopentane,” the company said in a press-release.
Following the pre-registration, the concern received additional time – until November 2010 – to ensure the
final registration of its products. The registration procedure will not interrupt Stirol’s deliveries to the EU.
UNIAN reference: Established in 1933, VAT Concern Stirol, based in Horlivka, Donetsk region, is Ukraine’s
leading producer of mineral fertilizers, polymer materials, and byproducts. It produces over 3 percent of the
world’s ammonia and carbamide export. Stirol is Ukraine’s only producer of foaming polystyrene. It also
produces paint-and-lacquer materials, non-organic acids and salts, biological fodder additives for animal
husbandry and medical products.

ZAT Halychyna’s (A, B-Series) Bonds Listed on PFTS

Tickers – OGLCHA, OGLCNB

ZAT Halychyna’s (A, B-series) registered interest bonds have completed the listing procedure and have been
included in the tier II PFTS list (tickers – OGLCHA, OGLCHB), according to the PFTS press-service.
On June 10, 2008, the PFTS and Halychyna signed a deal on the bond listing.
UNIAN reference: ZAT Halychyna, based in Radekhiv, Lviv region, was founded in 1998. Its core business
includes the production and sale of whole milk products, as well as skim-milk powder, butter and hard
cheese.


NBU Abolishes Restrictions for Carrying Cash across Borders

New policy to take effect on July 27

The National Bank of Ukraine has abandoned all restrictions on the movement of cash across the nation’s
borders. NBU resolution #148 “On Movement of Cash and Banking Metals across Ukrainian Border” of
May 27, 2008, was registered with the Ministry of Justice on June 11, and has been published on the
parliamentary web-site.
The document will take effect on July 27, 45 days after its registration.
The document says that private individuals can carry the equivalent of 10,000 euros of undeclared cash
across Ukrainian borders. Any amount above 10,000 euros should be declared in customs upon. Official
representatives of companies and other legal entities will also be allowed to bring carry an unlimited amount
of cash both in and out of the country, provided they indicate the amount in a written declaration.
Currently, individuals can bring more than 50,000 hryvnias per person in and out of Ukraine. Also, no more
than the equivalent of $10,000 in foreign currency can be taken out, and no more that $15,000 can be brought
into the country. To carry more cash across the border, one must receive an NBU license and prove that the
cash was obtained in a lawful manner.
Beginning from July 27, individuals and companies will also be allowed to send up to 300 euros by mail
order, while today the maximum transfer is $100.

				
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