Ukrainian bonds surge sharply: how possible negotiations between Trump and Putin affect the market.

Ukrainian bonds and Russian assets are rising amid expectations of possible negotiations between Donald Trump and Vladimir Putin. Investors hope that any progress in dialogue may positively impact the markets and increase prices for assets linked to both countries.

According to reports, investors have recently been actively purchasing Ukrainian securities and Russian assets, responding to signals about the approaching meeting between Donald Trump and Vladimir Putin. They see the possibility of a positive impact on the markets even with partial progress in negotiations.

'People are still skeptical, but I think we may have slightly underestimated Trump. People did not expect that what was essentially an ultimatum to Putin would lead somewhere,' highlighted Roger Mark, an analyst at asset management company Ninety One, regarding the recent negotiations between the USA and Russia.

Shares of Raiffeisen, the largest European bank operating in Russia, registered in Vienna, increased by 20% over the last two days, surpassing the figures of February 2022. This trend preceded a Russian court's decision to lift the ban on the sale of its local 'subsidiary bank,' which was an important step towards a potential agreement.

At the same time, shares of Rusal, owned by Oleg Deripaska and listed in Hong Kong, rose by more than 10% over the week but remain 38% lower compared to the pre-war level.

Funding for the army

Even with hopes for negotiations on a ceasefire, Ukraine continues to seek additional funds to finance its army. For example, the new Prime Minister of Ukraine, Yulia Svyrydenko, hinted that the country might turn to international funds for financial support.

Last year, Ukraine restructured over $20 billion in foreign currency debt to secure additional resources for the war effort. The country is now considering seeking a new loan from the IMF, which may come with additional conditions from creditors.

Previously, Ukrainian bonds lost value after the failure of the 'Trump deal' at the beginning of the current year when there were hopes for the conflict to end within the first weeks of Trump's second presidential term.

During expectations of possible negotiations between the leaders of the USA and Russia, prices for Ukrainian bonds and Russian assets began to rise. Investors believe that even small progress in dialogue could positively affect the markets. At the same time, Ukraine has to search for additional funds to finance its army, preparing for new measures to obtain international assistance.