OREANDA-NEWS. According to Dimitry Sologoub, Analyst of Raiffeisen Bank Aval, the events of recent weeks have indicated that Ukraine so far proves resilient to the ongoing turbulences in the global financial markets.

First, three Ukrainian banks have recently announced having attracted syndicated loans in the international markets for a total amount of around USD 300 mln. Interest rates on these loans are higher than in pre-crisis times as the loans are made at a floating rate tied to LIBOR, which has jumped upwards since July. However, the spread didn’t increase, indicating that perception of Ukraine’s country risk didn’t change. "Thus, despite significant tightening of borrowing conditions in the international markets, Ukrainian banks still have access to foreign credits albeit at a higher interest rate," Dimitry Sologoub said.

Second, Ukrainian stock market remains bullish, as after some volatility in August-September PFTS index is steadily growing in October regularly breaking historical highs. Both domestic and foreign investors are optimistic about Ukraine’s stock market at the background of diminishing political uncertainty and favorable economic situation.

Finally, domestic corporate debt market is awash with liquidity at the moment thanks to ample domestic liquidity conditions and high demand of foreign investors for Ukrainian debt instruments. Therefore, the banks have stepped up in issuing domestic securities anticipating possible problems with foreign funding. Hence, Ukrainian financial markets remain attractive for foreign investors, and despite deteriorating trade balance, currency inflow into Ukraine continues, and the National Bank is accumulating reserves. In the opinion of the expert, the situation in Ukraine is in line with the tendency observed in other emerging markets. Despite the turmoil in the international financial markets and the build-up of economic problems in the US, the appetite of foreign investors for assets in emerging economies is rising. Unlike 10 years ago before Asian crisis, at the moment the positions of countries with emerging markets look much more sustainable taking into account such factors as low public debt burden, prudent fiscal policy, rising income levels and substantial amount of foreign exchange reserves.

However, some of emerging economies (namely Baltic states and few other Eastern European countries) with extremely high current account deficits, significant share of short-term capital in foreign portfolio investments, and skyrocketing asset prices look vulnerable to global financial upheavals. And if any of these countries goes in trouble, it might affect other emerging economies as well — foreign investors’ risk perception of emerging markets would rise causing the capital to flow out of these countries.