Ukraine’s metrics improve since Russia invasion
Changes to Ukraine since the start of the war with Russia have meant Ukraine has become a more investable country than previously, according to VanEck.
Prior to the war, VanEck did not hold any exposure to Ukraine but Eric Fine, head of active emerging market debt, said that the country’s metrics had improved since the invasion.
“Under our investment process, the country has improved on the metrics that had constrained us from owning it; its policy/politics score is improving.
“Our process considers and incorporates non-systematic risks like a war. The reason Ukraine’s policy/politics score has improved is that there has been an outpouring of international support for Ukraine that dwarfs its external financing requirements.
“Not only is Ukraine already financed by official creditors, but the amount of financing that looks to be in the pipeline as a reaction to Ukraine’s invasion dwarfs current financing.”
This included a consideration by the US Congress to provide US$6-10 billion, US$1.4 billion from the International Monetary Fund through a Rapid Financing Instrument and a welcoming of its application to join the European Union (EU) which would provide significant funding.
While military spending could increase, this would likely be financed by Germany and the EU while reconstruction costs would be covered by multilateral agencies.
“While the region remains in conflict, we continue to actively manage our emerging markets bond portfolio in line with our philosophy. We believe an optimal portfolio of emerging market bonds is unconstrained by indices, and invests in bonds that offer the best value relative to their fundamentals while managing risk,” Fine concluded.
AUTHOR
Laura Dew
Recommended for you
Ausbil is growing its active ETF range with an ESG product in collaboration with sister company Candriam.
Philanthropic investment group Future Generation’s CEO, Caroline Gurney, will step down from her role at the start of next year.
The newly combined L1 Group is expectant of stabilising Platinum’s falling funds under management within the next 18 months, unveiling four growth pathways and a $330 million equity raise.
Janus Henderson Investors has launched a global small-cap fund for Australian investors, which includes a 5.4 per cent weighting to Australian equities.
