Oligarchism as a factor for institutional deformations of the stock market in Ukraine
Authors: Shyshkov S. Ye.
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Paper highlights classification factors of capital markets in the context of the imperfection of the Ukrainian stock market and the features of its unattractiveness for international investors. Author determined peculiarities and consequences of formation and deepening of the stock market deformations in Ukraine, as a reaction to the institutional trap of oligarchism. It was noted that Ukraine does not belong to the world leaders either in terms of the aggregate wealth of the richest people, nor in terms of their number, nor their share in the economy, nor inequality in society as a whole. However, due to the study of sectoral specialization of the billionaires’ assets in the economies of different countries, it was revealed that Ukraine has one of the highest concentrations of billionaire assets in the “raw” industries and the smallest in the financial and innovation sectors, which is one of the reasons for low values of quality of life and pace of their growth. The emphasis is on the consequences of such an economy and property structure that leads to lower competitiveness, insufficient financial incentives for innovation, reduced attractiveness for foreign investment through stock market instruments, simplified monopolization of strategic sectors of the economy and maximization of profits, complexity of market valuation of assets and fair taxation, generating profits and attracting investment in more attractive jurisdictions, limiting the sources of development internally at the stock market. It has been revealed that currently the regulated Ukrainian stock market is represented almost exclusively by government bonds, while the market for other securities is in a depressed state, not least because of the imperfect implementation of European standards, in particular squeeze-out procedures, as well as the lack of incentives for the functioning of public companies and public offerings. It was noted that the oligarchic nature of the Ukrainian economy with the predominance of semi-raw material specialization actually conserves the current state of the stock market with its key deficiencies (illiquidity, limited number of financial instruments, and the inability to form objective prices). As a result, due to a number of objective (socio-economic) and subjective (distorted regulation) reasons, there are no conditions and opportunities for the formation of fair prices for the vast majority of financial instruments (with the exception of only government bonds), including securities, which are used to calculate stock market indices, which determines their periodic staggering growth.