Kiev fears default

Khmelnitskiy Nuclear Power Plant (CC BY RLuts)

Ukraine will vote the debt relief deal

Bulgaria’s Central Bank is producing noise

Stagnation in Hungary’s construction sector

Ukraine

Ukraine’s parliament will today vote on USD 18 bn debt restructuring plan, being the result of the negotiations of Finance Minister Natalie Jaresko with private-sector creditors.

Government is afraid the deputies would reject the deal and cause Ukraine won’t repay its bonds on the maturity date which is September 23. That would mean Ukraine will follow Greece on default path. What is supposed to be a bone of contention? It is said that some deputies (also those from President Petro Poroshenko’s Solidarity party) think that a few elements of the agreement that bind repayment to private-sector creditors with gross domestic product, would in the long run, only increase the level of the debt. Defaulting on bond repayment later this month would make the international aid (for e.g. from the USD 40 bn bailout projected by International Monetary Fund) unavailable for Ukraine.

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Bulgaria

An American economist (and monetarist) and also a former advisor of Bulgaria’s President Steve Hanke claims Bulgarian National Bank produces too much noise while publishing information about the country’s banking system. He suggests the BNB to avoid „very aggregate statistics” and mixing information about huge and small banks in order to make BNB communicates more transparent.

He also said in the interview that the banking sector has improved recently in Bulgaria. It contrasts with what Prime Minister Boyko Borisov states that some banks that might go down need strong support. Professor responded: „He might be right and I might be right… and the reason is the Bulgarian National Bank is putting the information of all these banks together”.

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Hungary

Unless Hungary runs huge public works, the output of the Hungaria construction site didn’t grew very dynamically in Summer. It was only up 0.3 per cent year-to-year in July 2015. It is a decline, having in mind a year-on-year growth of 10.2 per in June.

The data from Hungarian Central Statistical Office (KSH) show that the production of both main groups of construction changed only slightly; the construction of buildings fell by 0.5 per cent and that of civil engineering works increased by 0.9 per cent.

What’s interesting, that the volume of new contracts was 4.2 per cent lower and in details: the volume of new contracts in the construction of buildings fell by 12.4 per cent and in the construction of civil engineerin works by 0.2 per cent.

Budapest Businesss Journal cites László Koji, the chief of business association EVOSZ, who claims that this data confirm expectations of further fall of the output during the rest of the yera. He also said that in absolute terms, output should reach HUF 2.100 trillion (for the year).

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Estonia

The average monthly car leasing payment for Riigikogu member is EUR 400–500 a month – reports Estonian Postimees. As there are 100 members of the parliament, some pay half of that sum, some twice the amount. You can check by name, who drives a Mercedes-Benz ML Bluetec 4Matic for EUR 930 a month, a BMW (x5 4.0 xDrive) for EUR 723 a month, Mercedes S320 for EUR 696 a month, and who drives a car that costs less than EUR 280 a month (for e.g. Peugeot 2008).

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Remember the corruption scandal at Port Tallinn? Two executives Ain Kaljurand and Allan Kiil were arrested in connection with the ongoing investigation at the company, which is 100 per cent state-owned. They are suspected of accepting bribes on a large scale over the years (probably starting from 2009). Now they are in detention cell and their lawyers want to replace the arrest with electronic surveillance. The Tallinn Circuit Court dismissed the application of Ain Kaljurand so that the manager would not be released soon. His lawyer now has 10 days to appeal. Allain Kiil’s application is still pending. In this case three more people were detained and questioned by the investigators at the end of August, but shortly after released.

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Ukraine

The Verkhovna Rada of Ukraine has just decided not to continue the project of compeletion of Khmelnytskyi Nuclear Power Polant. A special bill terminating the agreement between the Ukrainian and Russian governments was passed on Wednesday, supported by 234 parliament members. The Khmelnytskyi Nuclear Power Plant was supposed to operate four reactors. Now it consists of two, each generating 1000MW (net) of electricity. The first was built in 1981. The second – long after. The construction of the last two reactors was halt after the USSR fall. The investment were reopened in 2010 as a fruit of a deal between Russia and Ukraine. The completion of those reactors was to be coordinated by Energoatom (Ukrainian state enterprise operating nuclear power stations) and Atomstroyexport (Russian nuclear power service monopoly).

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After Gazprom CEO Alexei Miller and Adriy Kobolev from Naftogaz Ukrainy talks on Wednesday in Vienna, the agreement has been reached „on all fundamental bilateral issues”. Miller said on NTV television. Commenting the negotiations on NTV television, Miller said: „We expect that an agreement with the participation of the European Commission will be signed next week and supplies of Russian gas on a prepayment basis will resume on October 1”. Miller also revealed that Naftogaz is going to ask Gazprom for a new discount on gas prices. The request was ought to be forwarded to Russian government. But  Energy Minister Alexander Novak has just responded that his country will not provide Ukraine with additional gas discounts for the winter period beyond that which has already been determined. Let us remember that Ukraine has just got the discount and it’s in law till September 30, 2015. Supplies would resume from October 1.Ukraine has just received USD 500 m from EU to secure approx. 2 bn cubic metres of supplies for winter seaseon. But it’s not enough to get through it.

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What’s up in indexes?

Although BUX of Budapest and SAX of Bratislava grow faster then others (respectively 26.89 per cent and 18.96 per cent), they finished down on Wednesday, September 16. And which indexes were up?

BUX index (of the Budapest Stock Exchange) was again down on Wednesday. With 21107.42 index points it fell by 0.09 per cent. On Tuesday the result was 21126.96 index points. But it’s the leader, as mentioned above.

BET (of Bucharest) ended up 0.22 per cent with 7123.25 index points. The day before it was 7107.93 index points. It is also up 0.57 per cent from year-end.

PX (of Prague) increased from 1001.3 index points on Tuesday to 1002.30 index points on Wednesday. So the result is +0,1 per cent. From year-end it’s up 5.87 per cent.

WIG20 (of Warsaw) fell by 0.19 per cent on Wednesday (from 2185.88 index points on Tuesday to 2181.80 index points). From year-end it fell by 5.79 per cent.

SOFIX (of Sofia) ended down 0.63 per cent on Wednesday with 447.04 index points. The day before the result was 449.87 index points. And from year-end it is down 14.38 per cent.

OMX (of Tallinn) increased from 880.37 index points on Tuesday to 884.60 index points on Wednesday (up 0.48 per cent). It is up 17.16 per cent from year-end.

OMXV (of Vilnius) is still up. It increased from 486.07 index points on Tuesday to 487.59 index points on Wednesday (up 0.31 per cent). And from year-end it is up 7.72 per cent.

SAX (of Bratislava) gently slid. It fell by 0.68 per cent from 266.27 to 264.47 index points on Wednesday. But it’s up 18.96 per cent from year-end.

UX (Ukraine) was down 0.55 per cent on Wednesday with 962.86 index point compared to 967.98 index points of Tuesday. It dropped by 6.82 per cent from year-end.

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