Daily Insight-Fitch upgrades Ukraine sovereign rating; deflation in June; authorities move closer to IMF deal

The local share market soared yesterday by 4.7%, as measured by the UX index\'s performance, riding the crest of a broad wave of price appreciation among all liquid stocks, with banking shares among the highest gainers, thanks to positive news flow from Fitch, which upgraded Ukraine\'s sovereign rating, as well as that of a number of large commercial banks, reflecting both investors\' and the rating agency\'s views on this segment of the banking sector as being much healthier than the poorly managed and inadequately capitalised banks with local, private shareholders. As usual in an up market, Ukraine\'s steelmaking stocks were also among the top gainers of the day. Such widely held and high-volume shares as Ukrnafta (UNAF UK; NR; UAH266.00) and Concern Stirol (STIR UK; NR; UAH72.50) rose nicely, by more than 5% each during the day.

At the foreign-exchange market, the hryvnia rose to 7.909/USD from 7.914/USD in previous trading session. On the market for non-deliverable forwards, the one-year contract for the USD/UAH pair rose to 8.5/USD from 8.55/USD, suggesting that the market\'s perception on the hryvnia has improved, albeit slightly.

At the local currency bond market, the MoF raised UAH669m by placing a range of securities on a yield curve which, at its short end, is identical to the previous bond auction a week ago. However, the MoF managed to sell a bond due in March 2012 at yield-to-maturity of 10.28%, much lower than previous placements of the bond with such a tenor, which was at a level of 13% a month ago.