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Banking

Kazakhstan sets its sights on regional role

The Kazakh authorities would like to establish Almaty as a regional financial centre but further reform and market development is necessary first. Patrick Gill reports.

By Patrick Gill

KAZAKHSTAN HAS THE most sophisticated banking sector in the Commonwealth of Independent States (CIS) but the range of instruments available to domestic institutional investors is still limited. The government has now turned its attention to developing the stock market and pension funds as the next stage of its plan to establish Almaty as a regional financial centre.

With annual GDP growth of 8% to 10% expected for the next few years, investors generally see the domestic scene as favourable. However, the Almaty stock exchange suffers from a lack of liquidity, and pension funds have few options for investment. The number of mutual funds and other investment vehicles is expected to develop as regulation improves and more companies turn to the capital markets.

But so far there is little sign that the city’s Kase stock exchange is shaking off the illiquidity that plagues it. Larger Kazakh companies have recently been opting for a listing in London. Last year, for example, Kazakhmys and Kazakhgold undertook listings in London, bringing Kazakh companies to the attention of many London-based investors for the first time. Copper producer Kazakhmys raised $1.17 billion on the London Stock Exchange and Kazakhgold raised $197 million on junior market AIM.

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