Last week, Ukrainian CDS quotations declined by 51.8 b.p. from 980.2 b.p. to 928.4 b.p. The main influence on investors’ attitudes to Ukrainian risks was news from the political arena, including the new President’s inauguration (held February 25) and a decline in investors’ apprehension about further political destabilization in Ukraine.

Last week, Ukrainian CDS quotations declined by 1.7 b.p. from 980.8 b.p. to 979.1 b.p. Investors’ apprehension about further political destabilization in Ukraine after the second ballot of the presidential election has begun to decline. In our view, this should result in a lowering of Ukrainian CDS again next week.

Last week, Ukrainian CDS quotations took a 50.4 b.p. jump from 919.8 b.p. to 970.2 b.p. Such an increase occurred due to investor apprehension in relation to further political destabilization in Ukraine after the second ballot of the presidential election. Despite such a jump, Ukrainian CDS are still trading lower than Argentina’s and Venezuela’s CDS.

Last week, Ukrainian CDS quotations showed a decline of 37.3 b.p. from 956.7 b.p. to 919.4 b.p. Thus, Ukrainian CDS quotations moved to occupy the third place in the world, after Venezuela’s President reported about the nationalization of its retail network.

In this report we examine selected Ukrainian stocks that are still undervalued and look interesting for potential investors based on their strong fundamentals. The macroeconomic situation has become stable with a better outlook for the end of year compared with the figures which we predicted in 1Q09. The second IMF loan tranche played a positive role of increasing investor confidence in the local stock market. In our view, carefully chosen companies can be found with growth and value potential. We recommended to BUY such companies in the agriculture sector; MAYA GR, KER PW, MHPC LI; in energy PREN UZ, DOEN, UZ; in machinery MSICH UZ; in banking USCB UZ. We recommend to SELL positions in NFER UZ because the company could be going bankrupt. For each stock we provide a description of the price triggers that will help investors better understand the drivers which could influence possible stock price movements.