UAIB Analytical Review of the Asset Management Market in Ukraine in Q4 2019 & FY 2019. General Results

The Ukrainian stock market began its movement in 2019 by a sideways trend with moderate growth. Later on in the year, however, it was replaced by a steady downward trend. The ongoing international trade disputes between the world's largest economies, the first significant signals of the approaching global recession against this background, amid declining demand in commodity markets and rising volatility on the financial ones, all hindered growth. Domestic political turmoil during and after the presidential and parliamentary elections, which has fueled further efforts by domestic authorities to bring local financial markets regulations in line with European rules – coupled with growing uncertainty about the European integration prospects of these very markets – all this also created more risks than added appeal to the Ukrainian stock market. At the same time, during 2019, several events took place in Ukraine, of both legislative and monetary, and macroeconomic nature, many of which can be considered rather positive factors at least in the longer term. This year, some of them contributed to the intensified development of the government securities market, while the corporate sector expected additional incentives. In 2019, the Ukrainian asset management sector maintained an upward trend, relying more on private investment: the number of funds (CII) and the total value of assets under management increased during the year.

Number of market participants

Asset Management Companies (AMCs)

In Q4 2019, the number of asset management companies decreased by one, to 293, i.e. three less than at the beginning of the year. Throughout 2019, 5 new AMCs were created, and 8 companies ceased their activities.

At the end of 2018, 278 AMCs managed from one to 57 funds, and as before, more than 99% of all such AMCs managed at least one venture fund (CII).

Collective investment institutions (CII)

In Q4 2019, 47 new CII were registered, and for the whole of 2019 - 129. Considering closed funds, as of December 31, 2019, the total number of registered CII increased by 2.3% in Q4 and by 6.0% over the whole year, to 1890.

The number of CII that reached the minimum asset standard (‘established’ funds) increased for the ninth consecutive quarter and for the third year in a row, to 1326 (+ 3.3% for Q4 and + 8.0% for the whole of 2019).

Non-state pension funds (NPFs)

The number of NPFs under management as of December 31, 2019 remained at 58 (excluding the NBU corporate fund), including 46 open, 6 corporate and 6 professional. In total, the assets of NPFs were managed by 33 AMCs (those AMCs that submitted the relevant annual reports for 2019 to UAIB at the time of preparation of this analytical review, i.e. all such companies except one).

Insurance companies (IC)

The number of insurance companies that transferred their assets to AMC management did not change during 2019, as did the number of AMCs that provided the following services: as of December 31, 2019, one such AMC managed the assets of two insurance companies.

Assets in management and NAV

All institutional investors

Total assets under AMC management increased by 1.5% in the Q4 and as of December 31, 2019 it reached UAH 355,087 million. Thus, for the whole of 2019, they grew by 12.8%.

Collective investment institutions (CII)

In Q4 2019, the total assets of all CII under management, including those that had not yet reached the minimum asset value standard, grew by 1.4%, and for the whole year, by the same 12.8%, to UAH 353,337 million.

As of December 31, 2019, the assets of acting CII, which had reached the minimum assets standard (‘established’ funds), amounted to UAH 339,130 ​​million. For the whole year, it increased by at least 14.3%, and for Q4 they formally decreased by 0.2% (it was mainly due to incomplete reporting as the quarterly decrease was much smaller than the proportion of lacking fund annual reports due in March 2020 as the covid-19 pandemic prevention measures were introduced in Ukraine and it hampered reporting somewhat; we assess the completeness of the received reporting to be at least at 95% and 99% in terms of the number of reports and the assets of the reported funds respectively). Venture funds remained the engine of growth in the CII industry as their number increased even more rapidly in 2019.

The value of net assets of CII (‘established’ funds) as of December 31, 2019 reached UAH 261,206 million. In Q4, it formally decreased by 1.2%, and in 2019 overall it added at least 10.8%.

Non-state pension funds (NPFs)

NPF assets under AMC management in Q4 2019 accelerated growth to 3.4%, and to 17.5% for the whole year. As of December 31, 2019, they reached UAH 1,603.2 million.

Insurance companies (IC)

The assets of the IC under the AMC management decreased by 0.1% in Q4 2019 but increased by 21.2% over the year. As of December 31, 2019, these assets amounted to UAH 96.7 million.