How to invest in Ukraine’s stock market?


This post was intended to be an update on the situation in Ukraine, however, it became apparent that there is a dearth of information on the internet about how even to go about investing in Ukraine.  This post is an amalgam of our thoughts on Ukraine’s current situation as well as How to invest in Ukraine’s stock market?

Ukraine has spent December mired in internal conflict.  There are credible threats to the government, and the country remains on the verge of chaos.  One hopes though, that the country can work through its issues in a systematic manner.

For context of what has been happening in Ukraine, subsequent to President Yanukovych’s failure to sign agreements with the EU to boost relations and trade, see this link here.  Any agreement with the EU would be a boon for the economy.  A regional trade union with a former Soviet bloc simply could not have the impact that an EU trade agreement would.

Ukraine, is a country we watch closely.  It is on our dashboard, and it is one that we are optimistic about in the long term.  The only reason it doesn’t make it to our SIF30 is because of its declining population, as a result of low birth-rates and widespread emigration.  Ukraine is Europe’s 8th largest country, about equivalent to Spain in population, and equivalent to France in size.  It’s GDP per capita however, is on par with countries like Indonesia, Albania, and the Republic of Congo.  Clearly, there is a lot of growth potential for a literate, European country with an abundance of natural resources.  See the fact box below.

In the short-term, Ukraine is in bad shape.  The country remains in recession and has been downgraded for the last two years by credit agencies.  Swap markets suggest a chance of default in Ukraine at about 50%.  Ukraine has struggled to recover from the effects of the GFC.  In 2008, as you may recall the IMF provided Ukraine with a stand-by loan program of $16.5bn.  FT had a good article on some similarities between Ukraine’s situation and that of Pakistan.  The currency, in the last six years has depreciated by 40%.  However, that is a bit of a misleading statistic.  That depreciation occurred between October 2008 and December 2008, or in two months.  The currency has actually been remarkably stable over the past four years.  The chart below should demonstrate that.

YTD the market is -10.8% (USD) and the currency is -2.6%.  In the last 10 days, the market is only down -3.3% and the Hryvnia is up 0.8%.  As far as financial markets go, there is no crisis, not yet.  As you can see from the table below, the returns have not been uniform either.  STIROIL, in the last 90-days has returned 58.7% while Krukivsky Carriage Works (Truck manufacturer) has lost -23.2%.  There is tremendous value available in Ukraine’s equity markets.  Companies like UKR Nafta and Motor Sich have earnings yields approaching 50% (A P/E of 2).  See the market information box below.

The market is much more liquid than a lot of the markets we generally cover, and this makes it fairly easy to invest in.  Our recommendation would be to watch the Ukraine situation and invest on any significant dips, as the long-term prospects for country remain unchanged.  One thing to note is the market has very little diversity.  80% of the index is heavy industrials and basic materials.  There are only two banks in the index and one telecom country. See the table below for recent performance.

Unfortunately, there are no Ukraine ETFs that provide you exposure if you cannot invest directly.  There are numerous funds that have some exposure to Ukraine, but it isn’t significant.  Here is a listing of some funds with exposure to Ukraine.

If you would like to invest in Ukraine directly, there are a few options to go through with it.  Dragon Capital, one of the major brokers has a good overview of what you need to do here.  It is the usual list of passport, registration, identity, and a whole host of forms.  Most brokers seem to have restrictions on any non-resident investment.  However, there is no law restricting foreign investment.  One of the broker that is relatively easy to deal with in Ukraine is Foyil Securities.  If you are looking for a better understanding of the country, check out this overview by Baker McKenzie.

As always if you have any follow-up questions, comments, or concerns, please let us know.




  1. I was interested in investing in fixed deposits in Ukrainian banks… is that possible for non resident foreigners ? I have sent many enquiries but got no answer !

    • Yes, it’s possible if you come to Ukraine. You have to provide your passport and a visa. Or any documents proving that you’re staying in Ukraine legally. You must also provide documents proving that the source of money is what you claim.

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