Characteristic and prospects of development of a stock market in Ukraine

Formation and development of the Ukrainian state occurs in the conditions of a deep economic crisis. The exit from it depends on successes in realization of a radical economic reform, transition to market economy.

But it cannot exist without a strong stock market because attraction of investments into Ukraine and the transparent capital market of the securities is the guarantee of economic development.

For introduction of a policy and stock market regulation the unique institution is created. It is the State commission on securities and a stock market.

The purpose of a writing of the article is research of features of development and diagnostics of a present state of a stock market and necessity of forecasting of its following development in the conditions of present crisis.

In Ukraine interest to the stock market has started to be shown from the beginning of 90th years. The problem was investigated by such scientists-economists as M.A.Goltsberg, J.M.Lisenkov, V.V.Kolesnik, O.M.Mozgovogovy. They have analyzed the general questions of functioning of share markets and principles, the infrastructure and instruments of regulation of share markets. But results of their research had generally constructive character, and questions concerning a problem and prospects of development of a share market are not investigated enough.

In the law of Ukraine «About securities and a share market» it is noticed that a share market (capital market) – is aggregate of participants of a share market and legal relations between them concerning placement of securities, the circulation and a stock-taking of securities and derivatives.

Feature of a share market consists in Ukraine that it was formed thanks to realization of mass privatization and appearance about 30 million shareholders.

The equity market in Ukraine has passed a number of stages in the development.

At the first stage (1991-1994) laws have been passed «About economic companies», «About securities and stock exchange» that has started to development in Ukraine of stock exchanges. However absence of the necessary infrastructure, insufficient legal settlement conditional on the lowest rates of growth of the exchange market. The secondary market of securities was practically is absent.

For the second stage (1995-1999) it is characteristic quantitative and qualitative growth of exchange trade by securities in Ukraine. It was promoted by creation of the State commission on securities and a share market, definition and distribution of powers concerning its regulation among other state structures.

The third stage (2000-2005) was noted by end of mass privatization, necessity of service of investment processes and protection of the rights of investors. Somewhat it was promoted by decrees of the President of Ukraine «About the basic directions of development of a share market in Ukraine in 2000», «About urgent actions for acceleration of privatization of property in Ukraine» and to a number of other laws of Ukraine.

In the last years the domestic share market has demonstrated high enough rates of growth. Level of its capitalization behind results of 2006 constituted not less than 35 % of gross national product that completely relative with levels of capitalization of the share markets of Poland and Czechia. If to analyze volumes of issue of securities for 2007 it constituted 133,25 milliard grivnas, for comparison in 2006 is 84,07, and in 1996 – 1,83 milliard grivnas. On being in 31.12.2007 to nine organizers of trade a license to was given out realization of activity from organization of trade at the market of securities, including 7 exchange stocks and 2 trading-information systems. During 2007 on organizers of trade it is executed contracts on purchase-sale of securities for the 35,15 milliard grivnas. It is the greatest volume of the auctions which is recorded on organizers of trade compared with previous years.

Concerning a rating of popularity of securities which rotate on a share market it is possible to observe the following trend: stock of the enterprises constitute 49,39 % of all volume of the auctions, shares – 38,73, bonds of the internal state loan – 7,89 %, on all others it is necessary about 4 % of all volume of the auctions with securities.

However qualitative characteristics of a domestic share market are on a low level which prevents with it effectively to execute the functions connected with attraction and redistribution of investment resources. Successful share markets of the countries Central and the Eastern Europe (Czechia, Poland, Slovenia, Hungary, Croatia, the Baltic States) function on the basis of the consolidated system of exchange trade with the basic exchange on which consist overwhelming majority of agreements with securities. There are the system with the central depozitary-clearing centre. The organizations of these markets are inherent:

• High concentration of volumes of trade;

• Active concern of the state as market participant and as the regulator, directed on increase of liquidity of the market;

• Conscious support of demand for share market resources through activity settlement institutional investors and creation of conditions for concern of households in the market.

Unfortunately, despite swift rates of growth of the Ukrainian share market deformation of its structure is saved. The significant part of securities tradings is realized out of formal market limits.

For achievement of civilized trade, it is necessary for Ukraine to realize such steps:

• To develop rules to trade at exchanges, their functioning, guarantee of their reliability and a transparency;

• To realize active the politician concerning management of an internal debt which conditional availability on an internal formal market reliable, liquid securities – treasure bonds;

• There is a part of shares of the enterprises which are privatized sale on the organized share market;

• Maintenance of corresponding legislative base of functioning of the market that guaranteed protection of shareholder rights.

Attraction of investment means of the population is one of effective receptions. But it is far not each interested person has possibility for individual investment in securities. Effectively to invest in a share market should not the significant disposable capital, necessary experience and high skill, it is possible by means of investment foundations.

Purchasing securities of investment foundations, you invest the capital at once in generated by experts of the business a holdings of securities, perceptibly reducing own risks.

On the end of 2007 according to the Law of Ukraine «About institutes of the general investment» 334 funds are created.

As of 31.12.2007 IGI conducted the activity in 9 areas of Ukraine: Vinnitsa, Donetsk, Dnepropetrovsk, Zaporozhye, Ivano-Frankovsk, Lvov, Kyiv, Kherson, Chernigov.

For the purpose faster development of a share market the President of Ukraine has signed the Law "About modification of the Law of Ukraine" About institutes of the general investment (share and corporate investment foundations) ". The law which acceptances long time achieved market participants of the general investment and the State commission on securities and a stock market, will become effective already in February, 2009. If it, predictably, has taken place in the autumn of last year, influence of crisis on activity IGI would be much less.

The law is the positive factor for the subsequent development of the industry of the general investment and called to increase level of a transparency of institutes of the general investment for investors and level of security of their means.

The law regulates a question of asset diversification IGI that will allow them to withdraw more operatively assets from risk financial instruments and to put them in stabler instruments. Such approach will grant possibility company from the management of assets to show it professionalism.

The adoption of law of Ukraine «On joint-stock companies» in which the order of creation accurately is underlined, to activity, the terminations, their legal status, the rights and responsibilities of shareholders became one more important step of the Supreme Rada. In particular one of law items is that at creation of joint-stock company it should be registered at the least one Ukrainian stock exchange compulsory.

Hence, effective method of maintenance of stable economic growth and stock exchange and capital market development in Ukraine is both increase in receipts of the international private fund and attraction of domestic savings. However realization of this direction becomes possible only in case of maintenance of certain conditions, as here:

• The transparency of a share market which provides an easy approach of investors to the information on issue and the circulation of securities, does impossible "secret" schemes, eliminates displays of discrimination of subjects of the market;

• Predictability of result, which gives the chance to the foreign investor to analyze previously all risks of insertion of the capital in Ukraine and consequently to be the state of its obligations assured of fulfilment.