18:05 23.09.2019

'Kolomoisky factor' remains key fear for investors after election in Ukraine – Dragon Capital head

2 min read
'Kolomoisky factor' remains key fear for investors after election in Ukraine – Dragon Capital head

The main fears of investors linked with the victory of Volodymyr Zelensky and his team on the presidential and parliamentary elections, have dissipated, apart from the possible influence of businessman Ihor Kolomoisky, President of the European Business Association (EBA), Head of Dragon Capital Investment Company Tomas Fiala said at a meeting of the association "Global Outlook: Embracing Change" held on Monday.

"Unfortunately, today he is the biggest negative factor that focuses a lot of attention on itself, starting with its statement to the Financial Times late May that Ukraine should default," Tomas Fiala said, answering a question from EBA Executive Director Anna Derevyanko about Kolomoisky's influence on the growth of Ukraine.

The head of Dragon Capital said that Kolomoisky argued his words about the default, which led to a fall in the value of Ukrainian securities, with incorrect figures, in particular the level of public debt to GDP. In fact, today, the state debt to GDP fell to 53%, nonresidents have invested $3.5 billion in domestic government bonds since the beginning of the year, and rates on Ukrainian government securities and securities of Ukrainian state-owned companies have dropped to the lowest level in 10 years. The negative effect from the default in the current situation will be tens of times greater than any positive, Fiala said.

According to him, the market also reacted negatively to an article in the FT published last week with reference to Prime Minister of Ukraine Oleksiy Honcharuk about a possible compromise with the ex-shareholders of PrivatBank, including Kolomoisky.

The head of Dragon Capital said that intimidation of reformers, success in the denationalization of PrivatBank and the onset of independence by the NBU will subsequently be negatively taken by investors.

At the same time, Fiala said that two other fears that were six months ago – the change in the geopolitical vector and the inexperience of the new team – did not come true.

"Ukraine continues moving to the West. As for the team that Mr. Zelensky led, then I think that it is better than what it has ever been in Ukraine before, and better than it could have been at any other outcome of the election," the president of the EBA said.

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