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bne February 2022 Companies & Markets I 9
According to Leshchenko, the harvest exceeded the ministry’s preliminary forecast, estimated at 100mn tonnes for the year.
The successful harvest was also due to this year’s state
loans to farmers, accounting for $1.1bn in total to boost the industry. Ukrainians started buying and selling land after the 20-year moratorium on land transactions was officially lifted on July 1, 2021.
With 42mn hectares of farmland covering 70% of the country and about 25% of the world’s reserves of black soil, agriculture is Ukraine’s largest export industry.
Officially, large agro-corporations operate on 6mn hectares; small and medium agro-companies on some 11mn hectares.
The harvest alone will add 0.8% to the country’s gross domestic product (GDP), according to the National Bank’s report released in October 2021. In 2020, Ukraine’s agriculture sector generated roughly 9% of its GDP.
Ukraine exported 17% more agricultural products between January and September 2021 than in the same period of 2020.
The country exported roughly $18bn worth of agricultural products, up by $2.6bn compared to 2020, according to the State Statistic Service of Ukraine.
China was the largest importer of Ukrainian agricultural goods this year, accounting for roughly $3bn of exports, a 36% increase compared to 2020. India imported $1.35bn worth of agricultural goods, followed by the Netherlands with $1.2bn.
Inflows into EM and Russian securities resume after Christmas sell-off
Wojciech Kosc in Warsaw
Fund flows reversed and began flowing back into Russia’s securities following a sharp sell-off in the last two months of 2021 on the back of rapidly rising geopolitical tensions.
Fund flow tracker EPFR Global reported that Russian assets saw a net inflow of c$80mn in the week ending on January 6, ending the outflows of the last two months.
Russia’s dollar-denominated Russia Trading System (RTS) index peaked at 1920 in October, but then fell heavily, giving up almost half of all the gains it made over the course of 2021.
The RTS has lain moribund since the 2014 sanctions were imposed following Russia’s annexation of Crimea and the oil price shock of that year, trapped in a trading band of between 900 and 1300. It broke out in 2018 as individual names began to recover. By 2019 there was a broad-based rally that began to lift the index as a whole. The rally was put on hold during 2020 following yet another oil price shock and the start of the coronavirus (COVID-19) pandemic, but resumed in the third quarter once the vaccines appeared.
Russia was one of the world’s best performing markets in
2021 with the RTS up by a third, until the end of October when the US started reporting on a build-up of Russian forces on Ukraine’s border and Russian President Vladimir Putin demanded talks with the US and Nato on a new security deal, backed by the threat of “military and technical” action by Russia if his demands were not met. That lead to a sharp sell-off that saw the RTS index fall to just under 1600 by the end of the year.
US President Joe Biden has conceded starting talks with the Kremlin, which will commence next week on January 10 and go on for four days, as they also include sessions with the leading EU countries and the top military brass at Nato.
Prospects for a deal remain mixed, but there is some common ground, as both Biden and Putin want to restart some of the Cold War-era missile treaties. However, Putin’s insistence on legal guarantees of no further expansion of the Nato alliance will be a major sticking point.
Aside from the tense politics, Russia’s economy looks strong and companies have been earning record profits in 2021
that they are sharing with investors, with record dividend payments that will continue in 2022. Based on the economics, analysts marked Russia up to a Buy at the end of 2021 with
an end of target of 2000 for the RTS – provided there are
Russia RTS index 2019-2021
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