Tesla, Facebook, Microsoft, and Visa on the Ukrainian stock market: what will the arrival of the giants change?
Vadym Antsyferov, investor, co-founder & CEO of international companies GoMage and Sellbery
There is a stock market in Ukraine but that’s not for sure. Rather, it works only formally. Yes, certain operations are carried out there, individual shares are sold and bought, although Government bonds are mainly traded. And at the same time, Apple shares became available to everyone in the spring of last year. And on December 8, according to the decision of the National Commission on Securities and Stock Market of Ukraine (NSSMSC), the list was supplemented by shares of Tesla, Facebook, Netflix, Microsoft, AMD, and Visa, as well as the Invesco QQQ Trust SM fund. Does it make sense to bring such giants to our very small market? Actually, yes.
Ukrainian market now
The National Securities and Stock Market Commission provides market statistics in its reports. According to the latest documents, based on the results of trades held on the market during January-October 2020, the total volume of exchange-traded securities contracts amounted to UAH 258.86 billion. In comparison with the same period of 2019, the indicator increased, but only by 1.52%. The peak of the trade, if it can be called this way, was in March this year and was expressed in the number of contracts for almost UAH 42 billion.
The largest trading volume in 10 months of 2020 concerning transactions with government bonds (domestic government bonds of Ukraine) - UAH 253.69 billion, or 98% of the total volume of exchange contracts. But only UAH 543 million was spent on trading in shares. Separately, transactions with shares of foreign issuers accounted for only UAH 6 million. The numbers speak for themselves and without further ado describe the situation on the Ukrainian stock market, especially when it comes to trading stocks of companies.
In general, today only a few dozen companies' shares can be bought on the Ukrainian stock market. In fact, only a few are traded. Moreover, among the available, there are several foreign issuers: the already mentioned Apple Inc., also Freedom Holding Corp, Ukrproduct Group Ltd, and others. And now the list will become more impressive.
But will this somehow influence the market itself, will it become an incentive for its formation in Ukraine?
What changes will the Western giants bring to the market?
Just a month ago, the Prime Minister of Ukraine Denys Shmyhal voiced an ambitious goal - to create a civilized, and most importantly, a working stock market in Ukraine within three years. And it is definitely not a matter of small things, but of very many important and complex things - from legislation to determining the internal rules of the game in the market. At the same time, there are also enough barriers - corruption, a difficult business climate in the country, and the absence of an investment culture in general. And there is a lot of mistrust in all financial institutions.
It is precisely to increase the level of confidence in the stock market, which in fact does not even fully work, is a task with many asterisks. And just the entrance of such players as Tesla or Facebook, Microsoft or Visa is the way to take the first confident and loud step in this direction. Business, and every person, knows these market players, they are trusted, their products or services are used by millions of people in our country every day. The reputation of these companies is a chance to increase trust in the entire market. And also - to arouse interest, to draw the attention of mass consumers to the culture of investment.
In addition, investments in these companies are “dollar investments”, not hryvnia. The dollar serves as a protective asset that can protect the Ukrainian investor from devaluation.
A simple example. If there is a choice between the shares of Apple and Motor Sich, what will be the quickest desire, and will it be more logical to invest funds? When, in the first case, a company with a name, the most successful global brand that is constantly growing and developing, is sold in dollars. And in the second - the hryvnia and dubious prospects. The choice is obvious.
The market will definitely benefit from the ability to trade Tesla, Facebook, Netflix, Microsoft, AMD, and Visa stocks. As well as the Invesco QQQ Trust SM, which is one of the oldest and most successful exchange-traded funds on the planet.
These steps are a good way to popularize the very idea of developing the stock market in our country. If there is a demand for shares, interest, this will help to quickly reform the market, to get new and new players on it. Under such conditions, the government will be forced to become more active, make decisions, and not just declare intentions.