The slow construction of a capital market

A capital market is a set of institutions that allow a saver to lend to a borrower without knowing them. Ukraine has built one half of that and not the other, and the reasons are structural.

What works

The domestic government bond market. The state issues in hryvnia and in foreign currency, banks and individuals buy, there is a functioning primary auction and a secondary market, and settlement works.

Retail participation grew substantially once bonds could be bought through a banking application in a few taps, which is a distribution problem solved rather than a financial innovation.

And the war bond programme demonstrated that a domestic investor base exists and will lend to its own state.

What does not

Equity. There is a stock exchange and very little trades on it. The reasons are the reasons everywhere: few companies want to be public, minority shareholder protection has to be believed rather than legislated, and a family-owned company sees disclosure as a cost with no benefit.

What a real market would require

Custody and clearing infrastructure that international investors recognise.

Accounting and audit that a foreign analyst can rely on.

Institutional investors — pension funds and insurers with money to place — which is the missing piece and which depends on pension reform.

And a few successful listings to demonstrate that it can be done without losing control of a company.

Why it matters for reconstruction

Because grant money and development bank lending will not cover everything, and a country that can raise capital domestically is less dependent on the mood of external partners.

The absence of a capital market is a concrete constraint for a company of my size: when you want to grow, the only sources are a bank loan or your own profit. That keeps companies small and keeps them family-held. Given the private capital reconstruction needs, the missing equity market is a strategic gap rather than a technical one.