UK spearheads confiscating Russian assets

The United States will transfer confiscated Russian assets through Estonia
The United States will transfer confiscated Russian assets through Estonia

London has declared it’s ready to confiscate Russian assets and transfer them to Ukraine as a conditional loan in lieu of future reparations from Russia.

Markets continue to race forward with a disregard for any kind of risk, as evidenced most clearly by the success of Bitcoin, the generation’s favorite speculative tool. And of course, NVIDIA is ahead of the curve, on a high horse, as well as the market’s belief in AI. Perhaps out of contempt for the intelligence of ordinary people. Either way, the S&P 500 index, led by tech stocks, rallied again this week, adding about 60 points, and will open Friday at 5,157. Tesla isn’t doing as well as the rest of the market, which, given Elon Musk’s transformation over the past few years, can’t help but please. And the visionary is now once again not the richest person in the world, giving up the first position in the ranking to Jeff Bezos. Even China was able to crank out not the worst statistics this week, while those from the [Chinese Communist] Party assured the market they would eat their party ticket if they failed to show 5% annual growth.

The Federal Reserve, which is still expected to relax monetary policy, doesn’t prevent the markets from growing. Moreover, Fed head said he already sees on the horizon or even approaching the moment when the regulator will be comfortable with inflation, which significantly strengthened the euro against the dollar, where the exchange rate approached the 1.1 (USD/EUR) mark. Even despite the fact that investors were pleased by the boring European Central Bank, which announced that they expect to see inflation at the desired level of 2% next year.

Not everything is so unequivocally positive in emerging markets. Despite the return to the correct monetary policy last year, Turkey hasn’t yet been able to bring inflation under control, even after radical changes to the key interest rate. All the same, Erdoganomics [the monetary policy pursued by Turkish President Recep Tayyip Erdoğan] has run the show for too long. As a result, the latest inflation figures show a 66% rise in prices. And the disease turned out to be much more advanced than the market expected. It was fun this week in another country, which investors had often compared with Ukraine before the war (now investors simply have no countries left to compare us with): Egypt, having passed another electoral cycle, decided that it was necessary to bring back normality to the foreign exchange market, which had seen a huge gap between the official and black-market exchange rates. So, in one day, the official Egyptian pound (EGP) exchange rate was changed from EGP 30 per dollar to EGP 50 per dollar. The Egyptian authorities dared to do this amid growing confidence in the financial future after getting the first credit tranche from the United Arab Emirates. The latter don’t buy football players and have already built the tallest tower in the world, making the Saudi prince jealous, so they can support their brothers in faith and build them a new resort on the Mediterranean, away from the Houthis. The total investment is expected to be about $35 billion, with the first tranche of $10 billion coming this week. This, of course, inspired speculators and enabled the Central Bank of Egypt to proceed with the normalization of the foreign exchange market, even though the revenues from the operation of the Suez Canal have recently fallen by 50% due to the activity of the same Houthis, who not only gnaw the cables, but also continue to attack merchant ships that are now forced to sail around Africa, as in the very old and not the best of times.

It’s significant that the National Bank of Ukraine has managed to create a situation where even during the war and the fixed hryvnia [national currency] exchange rate, the difference with the black-market exchange rate remains marginal. And damn it, representatives of the Central Banks of Egypt and Argentina, and maybe even Lebanon and Venezuela (if there are still bankers left there who don’t serve the drug mafia) should come to Kyiv now instead of London. This week, the hryvnia fluctuated a bit again, but didn’t change much. The official exchange rate on Friday morning will be almost the same as a week earlier, i.e. about UAH 38.05 per dollar and UAH 38.4 per dollar at the black market. That 1% difference between the official and the black-market exchange rates looks like a reproach to the same Egyptians. The bond market continues to be calm, where the rates don’t change, while the volumes of bonds placed by the Finance Ministry remain steady. Showing that the government is comfortable with the level of finances it has on hand, even despite the ongoing chaos in U.S. politics, where there is still uncertainty as to whether an aid package for Ukraine will be passed, and if so, which one, and whether it will include a budgetary assistance.

In the stock market, which rarely needs to be mentioned, the majority shareholder of [agricultural giant] Kernel faced a surprise, which was banned by the Polish Securities and Exchange Commission from taking the rest of private investors, blocking the process of leaving the Warsaw Stock Exchange amid lawsuits filed by these shareholders. As a result, Ukrainian (and other) shareholders were able to show Polish farmers an example of a civilized blockade of agrarian oligarchs. At the same time, the Polish Securities and Exchange Commission, at least in part, took revenge for Polish pensioners, who had been too often stiffed in the last few decades by Ukrainian companies that entered the Warsaw Stock Exchange, and then dissolved in the steppes of Ukraine. The farmers themselves, for whom the Ukrainian border wasn’t enough, moved to the capital cities. Prague and Warsaw rioted this week, protesting the EU’s green transition policies.

The Ukrainian foreign debt market was again a bit optimistic this week. We can’t say that investors paid much attention to the fact that the president of the Czech Republic turned out to be the best crowdfunder in history, who in less than a month raised the entire amount necessary for the purchase of 800,000 artillery rounds, which, of course, will have a positive effect on the situation at the front. However, investors have noticed another attempt at British leadership, which is still more concrete than that of French President Emmanuel Macron. The British have declared they are ready to confiscate Russian assets and transfer them to Ukraine as a conditional loan in lieu of future reparations from Russia. In short, the Ukrainian Finance Ministry will definitely not have to worry about servicing this debt. For now, of course, the main question is how many of these Russian assets are in possession of His Majesty’s subjects. No matter how strange it sounds, for some reason there is no transparent data on this, while the market estimates amounts from $25 billion to $5 billion. However, if this year the United Kingdom would transfer at least $5 billion to Ukraine, it would already solve many problems and compensate for the prolonged impotence of the U.S. Congress, where so much time is devoted to talking about [U.S. President Joe] Biden’s age, although they [congressmen] themselves are showing signs of senility. The British have done many things first, and their leadership in this matter would be very useful. As a result, the prices of Ukrainian Eurobonds rose again, on average by 1 point.

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