Reforms hoped for in wake of Ukrainian elections

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Preliminary results from the Presidential elections in Ukraine this Sunday came in-line with pre-election exit polls. After counting 53.3% of votes submitted, political newcomer Volodymyr Zelensky takes the lead with 30.2% followed by current President Poroshenko with 16.6% and former PM Yulia Timoshenko with 13.1%. The election turnout reached 63.5% exceeding the previous Presidential elections in 2014 of 60.3%, meaning that young people came to vote. The result of Volodymyr Zelensky in the first round indicates a request for a fresh start for the country. Given Mr. Zelensky's larger-than-expected margin of victory over Mr. Poroshenko, the base case for Mr. Zelensky to prevail in the run-off vote in three weeks' time has now strengthened somewhat. 

Ukraine has a semi-presidential political set up and the focus in the coming months is likely to shift to parliamentary elections scheduled for October. If elected on April 21, Mr. Zelensky's ability to make inroads into parliament and form alliances with other parties will be critical in determining his effectiveness in governing. 

The press reports that despite minor irregularities, the ballot ended in an orderly fashion, likely precipitating no major turbulence during the vote count, with provisional results from 100% of districts likely to come in by the end of today.

The news is likely to be taken positively as the market prices out the possibility of Ms. Tymoshenko entering the second round. Volodymyr Zelensky seen by many as the most constructive on Russia - has many times voiced his desire to sit with Putin at the negotiations table. We believe the long-term conflict between Ukraine and Russia needs to be resolved, even though it might not be easy. 

We welcome the result as countries like Ukraine need a change in the political leadership to decrease corruption and implement reforms leading to economic growth.

Jacob Grapengiesser is partner & head of Eastern Europe, East Capital