Kuznetsova M . A ., Oglih V . V ., Rieznik M . A .

Oles Honchar Dnipropetrovsk National University , Ukraine

PROBLEMS AND PROSPECTS OF THE STOCK MARKET OF UKRAINE

 

Since 2007 the global economy has been very tense. The mortgage crisis in the US , the landslide of real estate prices, the bankruptcy of such big banks as Lehman Brothers and Merrill Lynch originated a crisis, which manifested itself in the drop in stock exchange indexes. A well-known index – the Dow Jones Index – started a series of falls. The drop in this index was followed by the drop in its Japanese competitor Nikkei and Hong Kong ’s Hang Seng , as well as in dozens of smaller stock market indexes all over the world. The world financial crisis has resulted in unemployment, inflation, production slowdown, etc. Thus, in 2009, in Ukraine , the GDP fell by 14,1%, which was one of the worst indicators of the GDP dynamics in the world, the industrial production fell by 25,0% within the same year.

The traced recovery after the crisis of 2008 was interrupted by rumors about the second wave of crisis, and the EU with the USA already started to take measures to prevent it. The beginning of 2011 was marked by a series of events associated with the activity of speculators, falling quotations, the default in the U.S. which was expected, but did not take place, and the forecasted default in Greece , the rise of crisis situations in such countries as Italy , Spain , Ireland , Portugal .

Having influenced the world stock exchanges hugely, the above-mentioned problems spread to the stock exchanges in Ukraine as well.

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 .

Summarizing the above-listed problems, we can make a conclusion that the stock markets in Ukraine , despite their number, are in their nascent condition. Therefore, the state should step in and actively participate in the process of stock market development by:

·         improving the laws about joint-stock companies;

·         fighting against corruption ;

·         stimulating the demand for Ukrainian products;

·         insuring appropriate corporate management and transparency of operations;

·         preserving equal conditions for activities of all the private enterprises;

·         creating normal investment climate and ensuring investment return.
  A stock exchange is a kind of a lever to distribute and redistribute the national income, a source of investment resources, a "shop" of securities and quite an important indicator of the economic development in a country. Therefore, the government should coordinate the efforts of all the interested parties in order to adequately ensure effective stock activities.

 

The list of references:

1.              Чумаченко М.Г. Аналіз тенденцій розвитку фондового ринку у світі та Україні / М.Г. Чумаченко // Схід – 2004.

2.              Рижикова В.С. Цінні папери: навч . посібник для студ . вищ . навч . закладів / В.С. Рижикова. – К.: Видавничий дім «Слово», 2004.

3.              Резго Г.Я. Биржевое дело / Г.Я. Резго , И.А. Кетова. – М.: Финанс ы , 2005.

4.              Килячков А.А. Рынок ценных бумаг и биржевое дело : учеб . пособ. / А.А. Килячков , Л.А. Чалдаева . – М.: Юристъ , 2000.