3rd-year student, sp. “Finance and Credit”, d/d, Scientific Advisor – Stupak M.H., Chernivtsi Trade and Economics Institute of KNTEU, Chernivtsi
THE CURRENT SITUATION OF THE UKRAINIAN STOCK MARKET AND THE PROSPECTS OF ITS DEVELOPMENT
The stock market of Ukraine appeared at the stage of the independent Ukrainian state formation and was developing with growth of the country’s economy and strengthening of its legal basis. Being an integral part of the world financial market, the stock market of Ukraine was formed under the influence of both economical and political processes taking place in the country. In spite of the great relative growth demonstrated by the Ukrainian stock market over the recent years, it remains backward and underdeveloped as compared with the stock markets of the European countries. The main purpose of this work is to analyze the current situation of the Ukrainian stock market and to determine the prospects of its development. A stock market is a significant component of economy of any state. What concerns Ukraine, the current situation in it is characterized by the fact that the efforts of governmental structures and the main market participants coincide strategically and are aimed at creating such possibilities which must enable the stock market to become an instrument for attraction both domestic and foreign investments, i.e. they will make it actual for Ukrainian enterprises of various economic sectors to obtain access to the international stock markets and financial resources. This finally must serve as a catalyst of economic growth and rising of living standards in all spheres of life in the country [1]. A paramount task of the stock market development in Ukraine is to improve its legal and organizational base, to increase its technological effectiveness and transparency, so that to make the Ukrainian stock market attractive for investments of large foreign companies and for a wide spectrum of private investors. One of the problems of the Ukrainian stock market is that it doesn’t perform its main function – 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 belongs to one proprietor, and the bulk of the votes in management decision-making belongs to the same proprietor. Due to the fear of competition, only a small part of shares is offered in 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 [2]. Another problem of our market is insufficient liquidity of securities, which leads to almost complete absence of ‘free float’ – 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 Ukrainian stock market is the level of trust and moral hazard. Unfortunately, the level of corruption is very high in our country and it increases every year. Thus, it is hard to talk about trust and confidence here. There is a small number of domestic players in 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 nearly 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. Taking into consideration the above-mentioned problems, it is obvious that the state should actively participate in the process of stock market development by: 1) improving the laws about joint-stock companies; 2) fighting against corruption; 3) stimulating the demand for Ukrainian products; 4) insuring appropriate corporate management and transparency of operations; 5) preserving equal conditions for activities of all the private enterprises; 6) creating normal investment climate and ensuring investment return. The general analysis of the situation in the stock market of Ukraine allows us to draw the following conclusions: in spite of its imperfect structure, poor legal basis and limited financial instruments, the stock market of Ukraine is an integral part of redistribution of domestic financial flows and a base for the economy restructuring, alongside with other components of the financial market. Moreover, the government should coordinate the efforts of all the interested parties in order to adequately ensure effective stock activities. Selected bibliography: 1. http://dnews.donetsk.ua/dntu/src/papers/111007 2. http://archive.nbuv.gov.ua/portal/soc_gum/Uproz/2012_15 3. http://finansystam.ru/en/content/stock-exchanges-ukraine
