An international banking group released an investment memorandum on Oct. 20 that suggests the next president of Ukraine will be determined, in part, by the weather.
The report, distributed to Eurobond investors by the London-based research department of Commerzbank Securities, begins by describing the economic programs of presidential candidate and Prime Minister Viktor Yanukovych and Viktor Yushchenko, leader of the Our Ukraine bloc, as “quite similar.” The report goes on to say that the type of weather on voting day will play a major factor in the outcome of the election because voters are largely polarized on a geographical basis, on language issues and by age.
“In our view, the probability of Yanukovych winning would be higher in better weather, which would most likely lead to a higher [voter] turnout, as his electorate is concentrated in the more populated south and east,” reads the third paragraph of the report.
“These regions are less politically active with an older population. A lower turnout would favor Yushchenko,” the report reads.
Citing “recent poll figures” but not identifying the polling firm that conducted the research, the report states that Yanukovych has 34 percent support; while Yushchenko stands a few percentage points behind, with 31.6 percent of the vote. Commerzbank also anticipates a voter turnout of about 78 percent.
The report reiterates the bank’s positive expectations on Ukraine’s credit risk in the medium- and long-term, yet advises investors to remain cautious ahead of the upcoming elections. Weak bond performance would be only “temporary.”
“A victory for the pro-government candidate could lead to short-term political tensions that might lead to bond weakness and a better buying opportunity,” the report reads.
