Jane Edmondson, head of index product strategy at TMX VettaFi, tells Proactive's Stephen Gunnion that Ukraine's GDP - after collapsing 30% in 2022 - is forecast to grow 4.5% this year, and that 90% of companies in the country are now fully operational. She argues that reconstruction is already under way and that investors do not need to wait for a peace deal to begin gaining exposure.
Edmondson cites the Ukraine Rapid Damage and Needs Assessment, published jointly by the Ukrainian government, the World Bank, the EU Commission and the United Nations, which put the cost of reconstruction and recovery at approximately $589 billion (around €510 billion) - roughly three times Ukraine's nominal GDP. The largest individual needs are in transportation, energy and housing, each requiring around $90 billion, while Citi estimates foreign direct investment could contribute $87 billion to $145 billion, covering 15 to 25% of total funding needs.
She explains how the underlying index for the Defiance Ukraine Reconstruction UAWAR ETF is constructed: companies must either be Ukrainian by domicile or headquarters, or must belong to business segments directly identified in the damage and needs assessment as recovery priorities - including construction and infrastructure, defence, building materials, and energy transition. European companies are favoured over global names for defence and infrastructure given geographic proximity, and global industrial names are included only if tied to recovery areas, with capped weightings.
Edmondson names several fund holdings across categories: Ukrainian drone-software firm Swarmer, telecom operator Kyivstar, and iron ore pellet producer Ferrexpo on the Ukrainian side; and Caterpillar, Vinci, CRH, ABB, Siemens, Schneider Electric, Eaton, Emerson, BAE Systems and Rheinmetall among the international names. She notes that Ukraine's reconstruction plans follow a 'Build Back Better' framework aligned with EU sustainability goals, covering clean energy, sustainable agriculture and green transportation.
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