UAIB Analytical Review of the Asset Management Market in Ukraine in 2012
Unlike the leading global markets, the Ukrainian stock market, together with the asset management industry, was facing hard times in 2012. The events developing in the international markets, even though being in uptrend on the whole, did not promote growth of national indexes. The positive effect of the passage of the long-awaited Law “On Collective Investment Institutions” was leveled off by introduction of a new excise tax on securities transactions. All the above, along with economic stagnation, investment climate impairment, absence of clear and stable rules, deficit of reliable financial instruments, strict regulatory requirements resulted in national stock indexes losing more than 35%.
A common trend of the national asset management industry in 2012 was continuing quantitative growth owing to new participants. Returns on investments, particularly into public investment funds, were not that attractive.
During 2012, the process of exiting business by AMC and opening new ones continued. It accelerated by year end, on the eve of an introduction of the regulatory changes as regards their activities in 2013. The situation with collective investment institutions was developing similarly. Finally, over the year, the total number of asset management companies, just as of collective investment institutions, grew. At that, traditionally most active sector of venture funds in 2012 accelerated growth pace even more. A decrease occurred in the sectors of open-ended and interval PIF, as well as closed-end non-diversified CIF.
Market growth in terms of assets was also stable. Aggregate net assets of all CII in 2012 accelerated growth, at that, mainly owing to venture funds.
During the year, an aggregate net capital outflow from open-ended CII was observed each and every month and, finally, 2012 indicator exceeded last year indicator more than twice and accounted for the lion’s share of sector NAV decrease. The greatest losses from investors’ exit were experienced by balanced funds and money market funds.
Conservative CII were also among those whose rates of return dropped most in connection with depreciation of the securities inside their portfolios. However, among them equity funds naturally prevailed. CII performance as regards rates of return in 2012 was generally negative, though significantly increased compared to the preceding year.
In the market of non-state pension funds’ asset management both uptrends and downtrends were registered. The number of AMC that managed NPF assets, just as the value of non-state pension funds’ assets under management, increased. Simultaneously, the number of NPF under company management continued to decrease.
Open NPF remained the greatest segment with 66 funds therein. AMC also managed assets of 8 corporate and 9 professional NPF.
The market of insurance companies’ asset management that for the first time had started growing actively back in 2011, in 2012 continued the said trend.
In 2013, the asset management market does not expect any cardinal improvements. Most likely, this year will become a period of living off scraps and active work in the area of legislative drafting necessary for the enactment in 2014 of the new law “On CII” on which market participants lay their hopes.
For more details on AMC and CII performance in 2012 please also see Analytical Review of the Collective Investments Market in Q4 2012.