Page 47 - bne IntelliNews Country Report: Ukraine Dec17

deposit rates and the exchange rate. Higher bank deposit rates should stimulate households to save more and cut consumption, thus at least partially offsetting the impact of increased social spending, including a pension hike effected in October.
At the same time, higher domestic interest rates would stimulate capital inflows , positively affecting the currency. It remains to be seen if banks increase their deposit rates accordingly (vs. current 14.2% p.a. on 6-month deposits) and whether this proves sufficient to tame consumption growth.
Headline y/y inflation is expected to turn on a downward trend in October on a high comparison base in the utilities component, the NBU will keep its discount rate unchanged at the next meeting in December. However, given the uncertainty about banks’ reaction and potential pressures on the currency stemming from seasonal year-end fiscal loosening, a further hike cannot be ruled out.
Dragon revised its end-2017 and end-2018 discount rate projections to 13.5% and 11.5% p.a. from 12.5% and 10.0%, respectively. On a positive note, we think the NBU’s decision to go ahead with a rate hike in the absence of a permanent NBU governor is a demonstration of the central bank’s increased independence.
8.3 Stock market
Ukraine's leading coal and power holding DTEK it squeezing out minority shareholders at DTEK Zakhidenergo after passing the 95% ownership threshold, Interfax news agency reported on November 27. The buyout price was set at UAH130.46 per share. This is the highest price at which DTEK and its parental structure, SCM Group, bought shares in this energy company over the previous 12 months. SCM Group structures hold a total of 97.3756% or 12,454,865 shares in Zakhidenergo. In August, the State Property Fund s old
47 UKRAINE Country Report December 2017 www.intellinews.com