Economical Sciences/2.
Finance
Korniychuk I.
National University of Food Technologies, Kiev, Ukraine
Ukrainian Stock Market
The stock market plays a pivotal role in the growth of
the industry and commerce of the country that eventually affects the economy of
the country to a great extent. That is reason that the government, industry and
even the central banks of the country keep a close watch on the happenings of
the stock market. The stock market is important from both the industry’s point
of view as well as the investor’s point of view.
A stock market is a significant component of economy
of any state, including Ukraine. The stock market is an aggregate of mechanisms
and regulations enabling to implement sale and purchase of securities. The
stock market has its own infrastructure – a set of systems, organizations and
technologies allowing the stock market participant to increase efficiency of
his business and to lower the risks due to the transactions at the market. The
securities, being an object of trading at the stock market are the documents
certifying rights of property in conformity with the established form and
obligatory details; the execution and transfer of securities is possible only
on presentation thereof. The stock exchanges are organizers of trading in
securities, their object of business being provision of the required terms of
regular circulation of the securities, determination of market prices and
distribution of this information. Stock indexes are component indicators
characterizing dynamics of cost fluctuations of securities from a definite set
– index basket. The process of market transformations in
Ukraine has created the preconditions for the formation of the securities
market, which led to an commitment in the study of this problem among native
scientists. This is reflected in the works by Y. Petruni, V. Oskol, G. Kalac,
V. Sheludko and others.
According to the Agency of Infrastructure Development
of the Ukrainian Stock Market (SMIDA), there are 11 stock exchanges in Ukraine,
the largest ones are PFTS Stock Exchange (PFTS ), the Ukrainian Stock Exchange,
Kyiv International Stock Exchange . The main indexes are the PFTS index, the UX
index and the UV index, respectively.
The stock exchanges of Ukraine don’t perform their
main function, i.e. the redistribution of people’s financial resources into the
most effective areas, since more than half of them are demonstrative versions.
The biggest part of each issuer’s shares belong to one proprietor , and the
bulk of the votes in management decision-making belong to the same proprietor ;
due to the fear of competition, only a small part of shares is offered on the
Stock Exchange. Thus, the conflict appears, which is provoked by the fact that
profit of the owner does not always correlate with interests of players in the
stock exchange, as it is not determined by the fall or rise in the stock prices
or the amount of dividends, but by its complete and absolutely uncontrolled
management exercised by the joint-stock company in its favor.
Another problem of our market is insufficient
liquidity of securities, which leads to almost complete absence of «Free –
float», i.e. of the free movement of investments and the possibility to acquire
a part of shares which is in free circulation by ordinary private investors and
speculators. The absence of stable domestic market will never attract people to
interact in the stock exchange of the country, and under conditions of poor
educational information system it is senseless to expect a wide range of
domestic investors.
An important component which determines functioning of
the stock market is the level of trust and moral hazard. Unfortunately, in our
country the level of corruption is very high and it increases every year, there
is no particular exchange commodities and the volumes of sales. Thus, it is
hard to talk about trust and confidence here, there are a small number of
domestic players on the Ukrainian Stock Exchange, and we face disbelief and
lack of foreign investors. The additional risks that Ukrainian Eurobonds
include lead to the fact that they are valued at at least 5,44% per year ,
which means that trust of foreign companies is becoming more and more expensive
for Ukraine.
All this happens against the background of unstable
state policy in the development of the stock market and weak legislative basis
that should regulate exchange operations. For achievement of civilized trade,
it is necessary for Ukraine to realize such steps: to develop rules to trade at
exchanges, their functioning, guarantee of their reliability and a
transparency; to realize active the politician concerning management of an
internal debt which conditional availability on an internal formal market
reliable, liquid securities – treasure bonds; there is a part of shares of the
enterprises which are privatized sale on the organized share market; maintenance
of corresponding legislative base of functioning of the market that guaranteed
protection of shareholder rights.
Attraction of investment means of the population is
one of effective receptions. But it is far not each interested person has
possibility for individual investment in securities. Effectively to invest in a
share market should not the significant disposable capital, necessary
experience and high skill, it is possible by means of investment foundations.
Hence, effective method of maintenance of stable
economic growth and stock exchange and capital market development in Ukraine is
both increase in receipts of the international private fund and attraction of
domestic savings. However realization of this direction becomes possible only
in case of maintenance of certain conditions, as here:
- The transparency of a share market which provides an
easy approach of investors to the information on issue and the circulation of
securities, does impossible "secret" schemes, eliminates displays of
discrimination of subjects of the market.
- Predictability of result, which gives the chance to
the foreign investor to analyze previously all risks of insertion of the
capital in Ukraine and consequently to be the state of its obligations assured
of fulfillment.
Literature:
1.
Importance
of stock market // ShareTipsInfo [Electronic resource]
Access mode: http://www.sharetipsinfo.com/economy-stock-maret.htm
2.
Ukrainian Stock Market Development
Strategy for 2010 // Antiraider [Electronic resource] Access mode: http://www.antiraider.ua/ucp_mod_420.html,
last viewed: 15.10.2010.