Kazakhstan Chamber of Commerce in the USA

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Evolution of role sees fund gearing up for ‘People’s IPO’ 0

Posted on December 25, 2011 by Alex

The heart of Kazakhstan’s economy, Samruk-Kazyna has, since its inception, played a crucial role in the country’s industry and economy. Now the fund is ready to float some  of its assets at discounted prices to retail investors. By Clare Nuttall

Kazakhstan’s sovereign wealth fund Samruk-Kazyna put to work billions of US dollars to support the economy during the global economic crisis. With Kazakhstan growing strongly, the fund’s role has evolved – it is now responsible for creating new industries and increasing efficiency in the economy’s most important companies.

This year will see further dramatic changes, as minority stakes in some of its largest and most attractive companies are floated on the domestic stock exchange. Samruk-Kazyna was created in the depths of the crisis through the merger of two existing organizations – holding company Samruk and investment company Kazyna – in October 2008, and its importance to the Kazakh economy cannot be overestimated. Its subsidiary companies include the national rail and postal companies, electricity grid operator Kegoc, state oil-and-gas giant National Company KazMunaiGas, nuclear company Kazatomprom, national air carrier Air Astana, and three of the top four banks. It is also the parent of the Damu small enterprise fund, private equity fund of funds Kazyna Capital Management, and other  financial organizations.

Overall, Samruk-Kazyna manages assets worth in excess of $70 billion, accounting for around 40 percent of the economic activity in the country. It has a total of 404 subsidiaries and affiliated companies. As of March 2010, Samruk-Kazyna announced it had invested KZT897 billion ($6.1 billion) from Kazakhstan’s National Fund to support the economy during the crisis. Its largest financial commitment was to the banking sector, where it invested some KZT486 billion.

Other anti-crisis measures included supporting the real-estate sector (KZT360 billion), support for small and medium-sized enterprises (KZT120 billion) and implementing industrial and infrastructure projects (KZT121.5 billion).

Samruk-Kazyna became the majority shareholder of  BTA Bank and Alliance Bank, injecting liquidity when both were on the brink of collapse in February 2009. Today, a debt restructuring for the two banks has been agreed with creditors.

At the same time, the fund took minority stakes in Kazakhstan’s other big-four banks, Halyk Bank and Kazkommertsbank. Now that GDP growth in Kazakhstan has returned to pre-crisis levels, Samruk-Kazyna is starting to divest some of the assets it acquired during the crisis. The fund has already exited its investment in Halyk, selling the stake back to the bank and its majority shareholder Almex.

Kazkommertsbank could buy back its shareholding in the near future. A sale of BTA to Russia’s Sberbank is still on the cards and Samruk-Kazyna is also looking at potential exit routes for Alliance, but it is adamant that it will sell its shareholdings only if the price is right.

Post crisis, Samruk-Kazyna is involved in raising the efficiency of its subsidiaries, and is the main conduit for big foreign investment projects. The emphasis within Kazakhstan has shifted toward production of processed and value-added products, rather than being purely a supplier of raw materials.

Several of the priority projects within the 2010-14 Accelerated Industrial and Innovative Development program are aimed at achieving this goal. Samruk-Kazyna is already working to diversify and industrialize Kazakhstan. The ‘breakthrough projects’ under the Samruk-Kazyna umbrella include reconstruction of the Atyrau refinery, modernization of the national electricity grid and construction of several new power stations. Within Samruk-Kazyna, two holding companies created in late 2008 are responsible for the chemicals and metals sectors, respectively. The United Chemicals Company was set up to develop a national chemicals industry and reduce Kazakhstan’s dependence on imports of products such as fertilizers. Tau Ken Samruk is the holding company for the Kazakh government’s stakes in metals and mining companies. While oil and gas still account for the lion’s share of Kazakhstan’s exports, metals and mining have been growing in importance in recent years.

Soaring metals prices, and the steady growth in demand from neighboring China in particular, have provided an impetus for Kazakhstan to increase its output. The government stakes in two major London Stock Exchange-listed mining companies – Eurasian Natural Resources Company (ENRC) and Kazakhmys – are held within Tau Ken Samruk. Both companies have an immense presence in the Kazakhstan mining sector, as well as internationally.

Kazakhmys is the largest copper producer in Kazakhstan and one of the top 10 producers worldwide. ENRC – a diversified natural resources group – has a presence in China, Russia, Brazil and Africa, as well as in Kazakhstan. This year has already seen significant changes for Samruk-Kazyna. On April 12, Timur Kulibayev was promoted to chairman as part of the post-elections reshuffle. Kulibayev, the son-in-law of Kazakh president Nursultan Nazarbayev, was previously the company’s deputy chairman.

The fund’s main task this year will be to carry out the ‘People’s IPO’ program, under which shares in companies that are wholly or partly owned by Samruk-Kazyna will be offered at a discount to retail investors and pension funds. In addition to raising funds for expansion, the program is also intended to stimulate the domestic capital market.

At least some of the IPOs are due to take place by the end of this year. Companies expected to be part of the first wave of IPOs include power-generation company Samruk-Energo, electricity grid operator Kegoc, postal service Kazpost and KazMunaiGas Exploration and Production. In the following two years, IPOs of other companies – including Kazatomprom, National Company KazMunaiGas, and railway operator Kazakhstan Temir Zholy – are planned.

SOURCE: Invest in Kazakhstan, 2011, p. 45-46

Bouncing back 0

Posted on November 04, 2011 by Alex

This year sees Kazakhstan well on its way toward a robust recovery. By Ben Aris

Kazakhstan is rebounding swiftly from the worldwide economic downturn, with the country’s economy looking set to surge due  to the advent of fresh oil and gas from the Kashagan offshore field.

Kazakhstan went into the 2008 crisis early. The republic’s banks had been enjoying triple-digit growth for several years, largely funded by loans and bonds drawn from the international credit markets. So, as the US subprime mortgage crisis unfolded and the credit markets dried up in 2007-08, the Kazakh banks were among the first to suffer.

However, thanks to swift action from the National Bank of Kazakhstan (NBK) and more than $4 billion in liquidity support to the banking sector, Kazakhstan came through the storm.

First in, first out. After commodity prices – particularly oil – started to recover in 2010, so too has the economy. But the republic is not out of the woods yet and a lot of clean-up work remains to be done. The banking sector still has a backlog of non-performing loans (NPL), though the strong performance of the country’s energy and mining sectors resulted in stronger-than-expected growth in 2010.

Banking regains buoyancy

The situation in the banking sector is gradually returning to normal after agreements on debt restructuring at BTA Bank, Alliance Bank and TemirBank. Having fallen hard during the crisis, Kazakhstan’s banking sector is now poised to outperform most of those in neighboring countries as it bounces back, according to investment banks such as Renaissance Capital.

Thanks to a progressive reform program in the previous decade, the structure of the Kazakh financial sector is still one of the best in the former Soviet Union and should return to growth once the issue of debt restructuring is resolved. Analysts estimate it will take around another two years for the problems of NPL to be fully worked out.

In the short term, commodity prices will determine exactly how the rest of 2011 pans out. But the unrest in North Africa in the first quarter of the year has already driven oil prices – the key contributor to Kazakhstan’s financial health – higher than most had been forecasting at the start of the year. This boost buys the government more time to drive through its wide-ranging reform program.

Kazakhstan’s economy grew by seven percent in 2010 and is forecast to continue its recovery in 2011 in the four to five percent range. The services sector is estimated to account for 51.8 percent of the country’s GDP in 2010, with industry comprising 42.8 percent, and agriculture at 5.4 percent.

The oil price is expected to average in the order of $90 for 2011, and this will give a boost to budget revenues. Meanwhile, the government is maintaining its extremely conservative oil-price assumption of $65 in the budget, which will almost certainly give it plenty of room for maneuver.

In general, as the economy begins to recover, so too should the public finances. Budget revenues totaled $30 billion in 2010 – up 46.5 percent from 2009, and 6.5 percent above 2010 government projections – and the budget deficit was set at $5.5 billion (4.1 percent of GDP).

A robust recovery is expected to lead to an improvement in the government’s fiscal position. The state budget for 2011-13 has been adopted with a much lower deficit of 2.8 percent in 2011, based on additional revenues of $2.8 billion from a doubling of the oil export duty in 2011 to $40 per metric tonne.

In the clearest sign yet of a return to economic normality, the NBK ended its control of the exchange rate in February and returned to a managed float system. The Kazakh currency, the tenge, is expected to remain relatively stable against the dollar throughout 2011, although there may be some slight appreciation, say analysts.

One of the most difficult economic challenges that the country faces is coping with inflation. Consumer price inflation in Kazakhstan in 2010 was in line with Renaissance Capital’s 7.7 percent forecast and was mostly driven by growing global commodity and food prices. The major driver was food prices, which grew 10.1 percent and contributed half of the increase, while services and non-food products grew 6.8 percent and 5.5 percent respectively, with roughly equal contributions.

On the back of the brightening economic picture, Fitch Ratings revised its sovereign rating on Kazakhstan to ‘positive’ at the start of 2011, while Standard & Poor’s raised its sovereign rating one notch to ‘BBB’.

Kazakhstan is slightly behind countries such as Russia and China – where growth is expected to slow over the medium term – but in terms of development, it should continue to close the gap on its bigger cousins to the north and east. The medium-term prospects for strong growth are very good. “GDP was up more than we expected in 2010, owing to the recovery in prices for commodities including oil, gold, copper and uranium,” says Jean-Christophe Lermisiaux, head of research at Visor Capital. “And there is no reason to see this changing for the foreseeable future.”

However, he adds that there are disparities between the natural resources sector and other sectors of the economy – in particular the banking sector, which is “still convalescing”.

Energy potential

Oil and gas remain the engine of the economy. Kazakhstan is already among the top 20 oil producers in the world, and production continues to pick up. Close on the horizon is the launch of the first phase of Kashagan Field – the world’s largest offshore oil-and-gas project – which is expected on, or possibly ahead of, schedule in the first half of 2013. The start of production from this field will be a game-hanger, as it will massively boost the country’s production and increase its geopolitical standing.

However, the development of the extractive industries is shifting from simply lifting production levels to expanding distribution, increasing efficiency and adding more value. The major event in the oil-and-gas industry in recent years has been the opening of the Central Asia-China gas pipeline and new oil pipelines linking oilfields from western Kazakhstan to China. Arguably, building pipelines to new markets has a bigger impact on the economy than finding new and bigger fields – Kazakhstan’s eastern neighbor remains the primary market for its raw materials.

As well as underpinning global demand for commodities, China accounts for 30 to 40 percent of Kazakhstan’s exports. Construction of the Western Europe-Western China highway, and the planned rail link from Zhetigen near Almaty to the Chinese border, will allow Kazakhstan to further increase its exports.

The strong performance of the natural resources sector in 2010 has not been matched by an expansion across the board, and the country is unlikely to see the kind of consumer boom that it enjoyed in the run-up to the global economic crisis – especially in the real-estate sector.

Banks have remained cautious when making loan decisions, and clearing the backlog of unfinished real-estate projects is only now nearing completion. The collapse of the property market was painful and hit the financial sector hard, as it was heavily exposed to this market. However, helped by government funds allocated through the anti-crisis program, most of the lost ground has been recovered. As the sector slowly returns to health, property developers are likely to start considering the first post-crisis projects in 2011.

“2010 was a transition year for Kazakhstan; 2011 will be the year of big decisions,” says Lermisiaux.

SOURCE: Invest In Kazakhstan 2011, p. 25-26

Kazakhstan Daily News Roundup – August 31, 2011 0

Posted on August 31, 2011 by Alex

ENERGY:

Kazakh oil fund to reach $72.5 billion in 2015 (SRI)

Kazakhstan has no plans to raise oil export duty until at least 2014 (SRI)

Crude output at oil facility hit by strike “almost back to normal” – KMG EP (SRI)

Central Asia – China gas pipeline to double capacity by 2015 (SRI)

Zhaikmunai nearly doubles income in first half (SRI)

Jupiter Energy pushes forward with exploration at Block 31 (Proactive Investors)

BUSINESS AND ECONOMY:

Alliance Bank slashes dividend, reports loss in first half (SRI)

Kazakhstan’s economy to grow 7% annually in 2012-2014 – Kelimbetov
(SRI) – Kazakhstan’s economy will grow by at least 7% annually in 2012-2014, based on an expected average oil price of $80 per barrel in 2012 and $70 from 2013 to 2016, Minister of Economic Development and Trade Kairat Kelimbetov told a government meeting on Saturday.

On the move: Former Justice Minister named chairman of Sberbank Kazakhstan (SRI)

Kazakhstan to export 3 million tonnes of grains to China (SRI)

BTA Bank adds $1.5 billion in provisions in July – regulator (Bloomberg)

Indicators – August 27, 2011 (Reuters)

METALS AND MINING:

Central Asia Resources to commence Kazakhstan gold mining in September (Proactive Investors)

POLITICS AND SECURITY:

Suspect killed as police admit terror in oil-rich western Kazakhstan (EurasiaNet)

SOCIETY:

Kazakhstan reels from impact of nuclear tests, 20 years on (AFP)

REGIONAL:

Nabucco more likely after Fukushima – EU’s Oettinger (Reuters)

Turkmenistan frees over 3,700 prisoners in amnesty (Reuters)

SOURCE: http://silkroadintelligencer.com/2011/08/31/kazakhstan-daily-news-roundup-august-31-2011/

 

Archive for August 29th, 2011 0

Posted on August 29, 2011 by Alex
By SRI ? August 29, 2011 ? Post a comment

(SRI) – Kazakhstan’s National Fund, the nation’s sovereign fund, will grow to $72.5 billion by 2015, Bloomberg reported, citing Economic Development and Trade Minister Kairat Kelimbetov.

(more…)

Alliance Bank slashes dividend, reports loss in first half

By SRI ? August 29, 2011 ? Post a comment

(SRI) – Shareholders of Alliance Bank voted on August 25 to slash the bank’s dividend payments on preferred stock to KZT100 ($0.68) from KZT2,680 ($18.36) per share to restore the lender’s capital position, Alliance said in a statement.

(more…)

SOURCE: http://silkroadintelligencer.com/2011/08/29/

 

Kazakhstan Daily News Roundup – August 10, 2011 0

Posted on August 09, 2011 by KazCham

Kazakhstan Daily News Roundup – July 25, 2011 0

Posted on July 25, 2011 by KazCham

HEADLINES:

Alliance bank considers sentencing of former chairman, executives too lenient, may appeal
(SRI) – Kazakhstan’s Alliance Bank said on Friday it regards the sentencing of its former ownership and management as too lenient and is considering appealing the court verdict.

Malaysia seeks greater presence in Kazakhstan
(bne) – Malaysian investors are targeting Central Asia in sectors ranging from oil and gas to Islamic finance. Although geographically distant, Malaysia shares with the Central Asian republics a religion and an economy based on natural resources.

BUSINESS AND ECONOMY:

Temirbank names new board members; increases capital reserves (SRI)

Russia’s Promsvyazbank to open representative office in Kazakhstan (SRI)

Bank Astana Finance, Homebroker lose banking licenses (SRI)

On the move: Eurasian Bank, Aktobe akim (SRI)

Number of SMEs in Kazakhstan growing – PM (Interfax)

Indicators – July 22, 2011 (Reuters)

POLITICS AND SECURITY:

Kazakhstan vows harsh crackdown on religious extremism (Interfax)

Austrian policeman provided Kazakh intelligence with Aliyev case data (Austrian Independent)

Kazakh President to attend nuclear security summit (TREND)

SOURCE: http://silkroadintelligencer.com/2011/07/25/kazakhstan-daily-news-roundup-july-25-2011/

 

Kazakhstan Daily News Roundup – July 12, 2011 1

Posted on July 11, 2011 by KazCham

Kazakhstan Daily News Roundup – July 11, 2011 0

Posted on July 10, 2011 by KazCham

Kazakhstan Daily News Roundup – June 23, 2011 0

Posted on June 23, 2011 by KazCham

ANALYSIS:

Strikes cripple oil production at major KMG EP oil fields
(SRI) – KazMunaiGas Exploration Production (KMG EP), the London-traded Kazakh oil company, continues to suffer production losses amid prolonged strikes at two of its major oil fields.

ENERGY:

Samruk-Energo reaches framework agreement with China Exim Bank (SRI)

BUSINESS AND ECONOMY:

Fitch affirms BTA Bank and Alliance Bank ratings (Fitch)

BTA Bank posted net loss last month – central bank (Bloomberg)

Indicators – June 22, 2011 (Reuters)

METALS AND MINING:

Kazakhmys to raise copper output 60% with new deposits
(SRI) – Kazakhmys, Kazakhstan’s largest copper miner, said the expected combined annual copper production at the Bozshakol and Aktogay deposits will be 200,000 tonnes, increasing the company’s copper output by 60%.

Kazzinc, BHP to vie for Tajik silver deposit
(Reuters) – A consortium led by Glencore-owned Kazzinc and BHP Billiton are the only contenders for Tajikistan’s largest silver field after three Chinese rivals withdrew their bids, a government official said.

SOCIETY:

Kazakhstan to introduce satellite surveillance to track immigrants avoiding extradition (Interfax)

SOURCE: http://silkroadintelligencer.com/2011/06/23/kazakhstan-daily-news-roundup-june-23-2011/

 

Kazakhstan Daily News Roundup – May 30, 2011 0

Posted on May 30, 2011 by KazCham

ENERGY:

KMG EP looks for new exploration assets at home and abroad
(bne) – KazMunaiGas Exploration Production is making a big push to acquire new oil and gas prospects both in Kazakhstan and abroad in order to maintain production levels as its main fields mature.

KazMunaiGas may transfer Kashagan stake to traded unit
(Bloomberg) – KazMunaiGas may transfer its stake in the Kashagan oil field to its London-traded unit, KazMunaiGas Exploration Production, said Kairgeldy Kabyldin, the CEO of the Kazakh state oil producer.

No plans to raise oil export duty – Mynbayev (SRI)

Kashagan extractions to start by 2012, Eni’s Descalzi tells Sole (Bloomberg)

Zhaikmunai reports $11.2 million in first-quarter income (SRI)

KazMunaiGas says workers’ strikes have little impact on output (Bloomberg)

BUSINESS AND ECONOMY:

Alliance Bank hires law firm to recover embezzled assets (SRI)

On the move: Samruk-Kazyna Real Estate Fund (SRI)

Emerging markets head for IMF unlikely – Marchenko (Financial Times)

BTA Bank bonds ‘everyone loves to hate’ slide to record lows (Bloomberg)

British court orders arrest of brother-in-law of Kazakh BTA bank ex-head (RIA Novosti)

China invests $5.5 billion in Kazakh economy in 2010 (SRI)

Astana closing in on WTO membership (EurasiaNet)

Indicators – May 27, 2011 (Reuters)

METALS AND MINING:

No new shares for Kazakhmys Hong Kong listing
(SRI) – Kazakhstan’s largest copper miner Kazakhmys said Friday its board of directors has approved a secondary listing of the company’s shares on the Hong Kong Stock Exchange in June but the listing won’t result in the issue of new shares.

Red October may buy stake in Kazakhstan copper project (Mining Weekly)

POLITICS:

Kazakh opposition calls for halt to China expansion
(Reuters) – Opposition activists in Kazakhstan called on the government on Saturday to stop Chinese investment in the country’s natural resources, saying Beijing could be preparing a land grab in Central Asia.

Jailed Kazakh human rights activist released on furlough (RFE/RL)

REGIONAL:

Tethys Petroleum finds oil at Tajik well; shares jump (Reuters)

Tajikistan at growing risk of insurgency – report (Reuters)

SOURCE: http://silkroadintelligencer.com/2011/05/30/kazakhstan-daily-news-roundup-may-30-2011/

 



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