Morgan Stanley analysts Oliver Weeks and Alina Slyusarchuk provide a quick update in the fast-moving Ukraine political situation:Politics: last steps towards forming a new government.
Last week the parliament passed a non-confidence vote in the
government. We see this as market positive as it increases
the prospects of future cooperation between the president and
new PM. Ms. Tymoshenko has already announced that she
moved to the opposition. Now parliament has 30 days to form
a new coalition. We expect it to be formed by mid-March after
coalition negotiations between the parties (mainly PR and Our
Ukraine) are over. Quick formation of a coalition would be
positive for the market and will be the final step towards a new
government. So far, two variants of coalition are possible.
One is Party of Regions, Lytvyn’s block, Communists and
deputies from other fractions (Azarov is the most likely PM in
this case). The second is Party of Regions and Our Ukraine.
Our Ukraine announced that it will join the coalition if
Yushenko will be PM. Another candidate for PM seat is
Yatsenyuk, being apparently both acceptable to Our Ukraine
and to the backers of Regions. We remain relatively optimistic
on the chances of formation of a new government, passing a
2010 budget and beginning substantive IMF negotiations.
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