Ukrainian Fund Market and Government Experts Call for Enhanced Minority Shareholder Rights

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During the Â?Viva la RevolucionÂ? Investment Conference, Ukrainian experts are painting varied pictures of the state of the country's fund markets. Operators cite considerable growth on one hand and officials are pointing at the need to make changes in legislature to provide a portfolio-investor friendly environment on the other.

During the ‘Viva la Revolucion’ Investment Conference, Ukrainian experts are painting varied pictures of the state of the country's fund markets. Operators cite considerable growth on one hand and officials are pointing at the need to make changes in legislature to provide a portfolio-investor friendly environment on the other. However, all agreed that investor rights must be bolstered, and one of the conference’s organizers called for dialogue to ensure that investor voices are heard in the process.

John Suggitt, the Executive Director of the Kiev-based investment company Concorde Capital, says that during 2004 the Ukrainian fund market tripled its trade volume and achieved a record high of 260.13 in December. The growth of trade volume up to UAH 7.7bn, as well as considerable PFTS (First Securities Trading System) capitalization and a 170.33 % improvement in the S&P/IFCF-Ukraine rating are important development indicators. These changes made the Ukrainian market the absolute leader among European markets. At the same time Mr. Suggitt confesses that the development has been substantionally hindered by the lack of legislature defending minority shareholders and other problems.

The Vice-Chairman of the parliamentary Budget Committee, Valeriy Asadchev, claims that in fact there is no proper fund market in Ukraine. Though evaluating the current market differently than Suggitt, Asadchev also thinks that Ukraine needs to introduce strong legislative protection for minority shareholders.

Another Ukrainian expert - Vice-Chairman of the parliamentary Committee on Financial and Banking Activities Viktor Kapustin - says that the Ukrainian fund market does exist, though it has a speculative character. In Ukraine just 1-2% of companies' shares are sold at the bourse, while Western companies trade 25-30% of their shares this way. Kapustin also says that securing minority investments by legislative means as well as by amending the legislature that regulates fund market activities will encourage the increase of the inflow of foreign as well as Ukrainian internal investments.

While acknowledging the Ukrainian stock market’s current predominantly speculative nature, John Suggitt mentioned that the radical revaluation of stocks by enterprises in 2004 enabled his company to function on the stock exchange while avoiding speculative schemes. His optimistic vision of the Ukrainian stock market is grounded on the results of Concorde Capital’s operations. A newcomer to the Ukrainian stock market, Concorde Capital succeeded in becoming the best performing trader according to the PFTS December, 2004 results.

Speaking on the policy measures required to speed up stock market development and to attract foreign investment, Suggitt emphasized the importance of dialogue among investors, government officials and business elites in resolving problems. The first step towards improving the situation was taken by Concorde Capital along with the Ukrainian Parliament, in initiating the “Viva la Revolucion” Investment Conference. The event aims at setting the stage for direct dialogue among all parties of the investment process.

The conference list of participants features ING Capital Markets, Credit Anstalt IB, UFG, East Capital Management, Hansberger Group and other leading investing companies, the combined MCAP of which totals around $ 35bn. Along with Asadchev and Kapustin, Anatoliy Balyuk, the Chairman of the State Securities and Stock Market Commission, Arseny Yatsenuk, Deputy Chairman of the National Bank of Ukraine and other top ranking government officials are highly expected to attend. Ukraine's industrial heavyweights, including UkrNafta, NAK Naftogaz, Zaporizhstal, Centrеnergo, AvtoKRAZ, Dniproazot, South Industrial-Investment Group, Stirol as well as Privatbank will represent Ukrainian business interests.

For additional information contact

John Suggitt

Concorde Capital

tel. +380 (44) 206-83-67

fax +380 (44) 206-83-66

E-mail: js@con-cap.com

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