Kazakhstan Chamber of Commerce in the USA

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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 – 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 – June 2, 2011 0

Posted on June 02, 2011 by KazCham

ENERGY:

Coal to remain Kazakhstan’s top energy source
(bne) – The Kazakhstan government has been flirting with ideas to introduce nuclear and renewable energy, but due to the country’s abundant reserves, coal remains the primary source of energy.

Kulibayev officially nominated to Gazprom board
(SRI) – Timur Kulibayev, head of the state-owned holding and investment company Samruk-Kazyna, has been officially nominated to join the board of directors of Russian gas giant Gazprom, local news agencies reported on Wednesday.

BUSINESS AND ECONOMY:

Temirbank suspends dividends, plans to boost capital (SRI)

Monthly inflation in Kazakhstan stays level at 0.5% in May (SRI)

Kaztemirtrans, Rusagrotrans form joint venture to deliver grain (Bloomberg)

Kazakhstan, Ukraine in talks on joint plane production (RIA Novosti)

Indicators – June 1, 2011 (Reuters)

METALS AND MINING:

Full steam ahead says Frontier Mining as 2011 promises ‘key decisions’ (Proactive Investors)

Central Asia Resources granted mining approval for Kazakhstan gold project (Proactive Investors)

POLITICS:

Leading political parties of Kazakhstan, China agree on cooperation (Interfax)

SOCIETY:

Second Astana car-bomber identified – police (Interfax)

SOURCE: http://silkroadintelligencer.com/2011/06/02/kazakhstan-daily-news-roundup-june-2-2011-2/

 

Kazakhstan Daily News Roundup – May 10, 2011 0

Posted on May 10, 2011 by KazCham

HEADLINES:

Glencore to increase stake in Kazzinc; Kazakh presidential advisor to reap profits
(SRI) – Glencore, the Swiss commodity trader which is poised to complete a record $11-billion IPO this month, is set to increase its stake in Kazakh miner Kazzinc and make a close presidential advisor a billionaire in the process.

Kazakh leaders talk up upcoming “people’s IPO”
(SRI) – The “people’s IPO” privatization program will be implemented transparently and will provide equal access to all Kazakh participants, head of the state holding and investment company Samruk-Kazyna, Timur Kulibayev, said on Friday.

On the move: government, KazMunaiGas, KaR-Tel
(SRI) – Kazakh President Nursultan Nazarbayev made several senior level appointments last week, the presidential press office reported.

ENERGY:

Tethys exploratory wells under test (Oil and Gas Journal)

BUSINESS AND ECONOMY:

Kaspi Bank Q1 profit rises to $10 million (SRI)

Temirbank reports $6.1-million first-quarter income (SRI)

Kazakhstan’s foreign reserves grow 5.9% in April (SRI)

Monthly inflation 0.5% in April (SRI)

EPC approves 7% economic growth plan (Interfax)

Indicators – May 6, 2011 (Reuters)

METALS AND MINING:

ENRC shareholders want board to face election, FT says (Bloomberg)

Frontier Mining acquires new deposit to expand Benkala copper mine (Proactive Investors)

POLITICS:

Kazakhs appoint new customs chief after China smuggling probe (Bloomberg)

REGIONAL:

Central Asian nations feel the pinch of dwindling fuel supplies as Russia tightens supplies (AP – Washington Post)

China, Kyrgyzstan, Tajikistan hold anti-terror drill

(AFP)

Kazakhstan Daily News Roundup – April 14, 2011 0

Posted on April 14, 2011 by KazCham

HEADLINES:

Kazakhstan’s central bank to retake regulatory powers
(bne) – After a seven-year flirtation with an independent regulator, the National Bank of Kazakhstan is to take back control of the regulation of the country’s financial services sector. A tougher line is envisaged.

ENERGY:

India to sign agreement on Satpayev block purchase
(SRI) – India’s state-owned Oil & Natural Gas Corp. (ONGC) will sign an agreement Saturday to purchase a 25% stake in the Satpayev exploration block in Kazakhstan, the company’s chairman said Wednesday.

CB&I unit wins engineering contract in Kazakhstan (Oil and Gas Journal)

Kazakhstan raises ceiling oil export quota (Interfax)

BUSINESS AND ECONOMY:

Temirbank raises full-year profit forecast by 16% (Bloomberg)

Kazakstan’s trade surplus rises to $7.7 billion in Jan-Feb (Reuters)

Almaty airport shares auction postponed until April 20 (Interfax)

Indicators – April 13, 2011 (Reuters)

METALS AND MINING:

AltynGroup readys for Hong Kong IPO – sources
(SRI) – AltynGroup, Kazakhstan’s gold producer owned by the Assaubayev family, is considereing conducting an Initial Public Offering (IPO) in Hong Kong, local newswire services reported.

SOURCE: http://silkroadintelligencer.com/2011/04/14/kazakhstan-daily-news-roundup-april-14-2011/

Kazakhstan’s Lenders Won’t Sell Bonds Overseas This Year, Government Says 0

Posted on July 27, 2010 by KazCham

Bloomberg, By Nariman Gizitdinov

Kazakhstan’s banks won’t sell any bonds abroad this year, removing the need for the government to create a benchmark for its fixed-income markets by selling debt on international capital markets, the Finance Ministry said.

The ministry said July 20 it canceled plans to sell as much as $750 million of bonds to investors outside its borders this year after obtaining a $1 billion loan from a World Bank unit.

BTA Bank, Alliance Bank, AO Astana Finance and Temirbank, then controlled by BTA, defaulted last year, leaving about $20 billion in debt to be restructured. State-controlled Alliance and Temirbank have completed their debt restructuring efforts, and BTA struck a deal with creditors in May.

Kazakhstan “is studying the possibility of selling Islamic bonds,” Finance Ministry spokeswoman Anna Zhekenova said by telephone from Astana today, without elaborating.

Kazakhstan wants to tighten environmental safety requirements on Royal Dutch Shell’s giant offshore Kashagan development in the wake of BP’s ongoing Gulf of Mexico disaster, in a further sign that the blow-out will increase the cost of oil projects worldwide.

Sauat Mynbayev, Kazakhstan’s Minister of Oil and Gas said: “It’s clear that we need the consortium members to take seriously the signals from the Gulf of Mexico event, and it’s clear that going forward, environmental issues will find their expression not simply in making more environmental constraints.”

Kashagan’s total expected costs have already ballooned from $57bn (?39bn) to $136bn, making it one of the most costly projects under development anywhere in the world today. Further safety measures risk making costs blow out still further.

Mynbayev said that Kashagan was in some ways much simpler than BP’s Gulf of Mexico well: while BP is drilling at a depth of 1.5km, Kashagan is in such shallow water that it almost qualifies as an onshore field. The development is taking place on an artificial island in the North of the Caspian.

But he said that the dangers were in other ways greater. An oil spill in the land-locked Caspian could have more far-reaching environmental consequences as the oil would have nowhere to dissipate, and the extremely high concentrations of sulphur in the Kashagan reservoir mean that a leak would kill anything living nearby. “Obviously we must take all measures to make sure that that doesn’t happen,” he said.

Shell has a 16.8pc stake in the North Caspian Operating Company developing the field, alongside France’s Total, and Italy’s ENI, which is overseeing the development.

Kazakhstan Daily News Roundup – July 21, 2010 0

Posted on July 21, 2010 by KazCham

HEADLINES:

Temirbank to return to profit in 2010 following successful debt restructuring
(SRI) – Temirbank, one of four Kazakh lenders which had defaulted in 2009, expects to post net profit of KZT2-3 billion ($13.6-20.4 million) this year, following the completion of its debt restructuring, its CEO Yerzhan Shaikenov said on Monday.

BTA to issue bonds to complete restructuring
(SRI) – BTA Bank, Kazakhstan’s third largest bank, will place nine bonds issues as part of its debt restructuring plan, the bank said in a statement.

Oil in Kazakhstan may be too rich for tax to deter Chevron – energy markets
(Bloomberg) – Kazakhstan’s oil reserves may be too valuable for an export-tax increase to deter companies from drilling for crude in the former Soviet republic.

ENERGY:

Ministry of Oil and Gas revokes 10 subsoil licenses (SRI)

Kazakhstan’s oil grab (The Oil and the Glory)

U.S. Ambassador demonstrates support for Karachaganak group (Dow Jones – NASDAQ)

Tethys Petroleum re-enters Akkulka well to test extension of Doris oil discovery (Proactive Investors)

BUSINESS AND ECONOMY:

Kazakhs drop planned 2010 Eurobond sale after $1 billion World Bank loan (Bloomberg)

Kazakh National Bank not to revise inflation forecast for 2010 (Interfax)

Headhunter Antal Russia opens in Almaty (EmergingMarkets.me)

Surrey building Kazakh Earth observation satellite for 2013 launch (Space News)

Cheyne’s Habib guits for Kazakh private equity gig (FINalternatives)

Kazakhstan may spent KZT580 billion on modernization of utilities in 2011-2015 (Interfax)

POLITICS:

Kazakhstan secures OSCE summit commitment (EurasiaNet)

REGIONAL:

Southern Kyrgyzstan forces may have used torture – UN (AFP)

Italy’s ENI turns to Azerbaijan for Nabucco supply (Reuters)

China seeks copper, tungsten, chromium in Central Asia – Ernst & Young (Bloomberg)

SOURCE: http://silkroadintelligencer.com/2010/07/21/kazakhstan-daily-news-roundup-july-21-2010/

Kazakhstan May Restrict Corporate Withdrawals to Protect Banks, S&P Says 0

Posted on May 18, 2010 by KazCham

Kazakhstan is likely to restrict corporate withdrawals to keep banks liquid and allow them to recover as the country’s lenders try to restructure about $20 billion in debt, Standard & Poor’s said.

“During the crisis, the government controlled very actively the largest deposits in banks, including incentives for state companies not to withdraw their money,” Ekaterina Trofimova, a Paris-based S&P bank rating director, said in a May 15 interview in Almaty. The state directly or indirectly controls one-third to half of Kazakh bank deposits, she said.

Companies are now seeing that the crisis is passing, and “they want to get their money back,” Trofimova said. “But banks won’t be allowed to collapse in the interest of major companies, including state-owned ones, so the removal of deposits by companies will be careful and coordinated. Withdrawals won’t break the banking system, but they will limit its growth.”

Banks in the former Soviet republic face continued weak asset quality, unreliable funding conditions, and low capitalization for at least two more years, Standard & Poor’s said on April 19. Kazakhstan’s financial industry is still struggling to recover from the failure of BTA Bank, which defaulted in April last year two months after it was taken over by the state-owned National Wellbeing Fund Samruk-Kazyna.

Bank Defaults

Besides BTA, which was the country’s biggest lender before its collapse, Alliance Bank, AO Astana Finance and Temirbank, then controlled by BTA, have also defaulted, leaving about $20 billion in debt to be restructured.

Samruk-Kazyna controls stakes in state-owned energy company KazMunaiGaz National Co., uranium miner Kazatomprom, railway monopoly Kazakhstan Temir Zholy and phone operator Kazakhtelecom. The fund also owns stakes in Kazkommertsbank and Halyk Savings Bank, the two biggest lenders by assets, and controls BTA, Alliance and Temirbank.

New foreign borrowing by KazMunaiGaz and Kazatomprom “reduce the urgency of the problem of a possible reduction of large deposits in local banks,” Trofimova said.

KazMunaiGaz sold $1.5 billion of 10-year notes last month, while Kazatomprom sold $500 million of five-year notes last week, according to Bloomberg data.

Deposit Growth

“It’s disputable that Kazakh banks can base their development strategy on domestic resources, since people’s incomes and savings are relatively small and companies’ liquidity has been largely exhausted by the crisis,” Trofimova said. Kazakh bank deposits will increase 20-25 percent at best this year, and no more than 30 percent in 2011, she said.

KazMunaiGas Exploration Production, the London-traded unit of KazMunaiGaz, keeps most of its $4 billion in cash at accounts with Kazkommertsbank and Halyk, Alexander Gladyshev, the company’s head of investor relations, said by telephone from the capital Astana today. “The company has no problem in financing its current operations and capital expenditure, including payments of dividends,” he said, adding that KazMunaiGas as yet has no need to make “billions in withdrawals.”

Sholpan Mukasheva, a spokeswoman for Samruk-Kazyna, Galym Tumabayev, a spokesman for KazMunaiGaz National Co., and Sergei Nasyrov, a spokesman for Kazatomprom, all declined to comment.

Kazakhstan’s 39 banks held 7.298 trillion tenge ($49.8 billion) in deposits in the first quarter, down from 8.09 trillion tenge in the same period last year, according to the website of the Agency for Financial Supervision.

‘Free Liquidity’

“Kazakh banks have free liquidity of about $12 billion,” central bank Chairman Grigori Marchenko said on April 21. The country will increase reserve requirements for banks if they don’t “invest their excess liquidity in loans” in the first quarter, he said in January.

According to Trofimova, “Kazakh banks don’t have excess liquidity; liquidity is entirely adequate, taking into account its short-term character, the high concentration of deposits and remaining uncertainty in domestic and foreign markets.”

Kazakh banks’ combined loan portfolio dropped to 9.472 trillion tenge last quarter from 10.255 trillion tenge a year earlier, data from the Agency for Financial Supervision show. Banks’ total assets slumped 15 percent in the period to 11.946 trillion tenge, it said on April 23.

Nonperforming Loans

The combined loan portfolio may grow as much as 10 percent this year, and will rise even more in 2011, Trofimova said. Kazakh banks’ nonperforming loans, including those that have been restructured, account for almost 55 percent of total loans, she said, adding that gradual improvement will be seen in the fourth quarter. Nonperforming loans issued by banks excluding the four that defaulted are at just over 40 percent, she said.

Kazakh lenders raised provisions, cash set aside to cover loan losses, to a combined 3.5 trillion tenge, or 37 percent of their loan portfolios, in the first quarter from 1.56 trillion tenge a year earlier, according to the financial watchdog.

The defaulted lenders may recover more than a half of nonperforming loans, while the rest will get back more than two thirds, but only in the two to four year period, Trofimova said.

The economy of Kazakhstan, which holds 3.2 percent of world oil reserves according to BP Plc, grew an annual 7.1 percent in the first quarter, the country’s State Statistics Agency said on May 14.

Economic growth slowed to 1.2 percent last year from 3.2 percent in 2008. The economy grew 10 percent on average each year between 2000 and 2007 as energy and commodity prices rose.

To contact the reporter on this story: Nariman Gizitdinov in Almaty at ngizitdinov@bloomberg.net

SOURCE: http://preview.bloomberg.com/news/2010-05-17/kazakhstan-may-freeze-corporate-deposits-to-protect-bank-funds-s-p-says.html

SamrukKazyna buys into Temirbank 0

Posted on May 15, 2010 by KazCham

Almaty. May 14. Interfax-Kazakhstan – SamrukKazyna Kazakh State Fund of National Welfare has acquired a shareholding in Temirbank, the Kazakhstan Stock Exchange (KASE) reported.

Thus, according to the register of the bank shareholders as at 12 May, 2010, SamrukKazyna held 75.93% in the total outstanding shares, Kazakhstan’s BTA Bank had 13.32%.

Meanwhile, state fund’s share in the total outstanding common shares was 79.93% (75.933 million) and BTA Bank held 14.02% (13.318 million).

The total authorized common shares total 95 million, while preferred stock comes to 5 million.

The bank repurchased 96,620 of its preferred shares.

Temirbank and its parent company BTA Bank are now restructuring the debts.

In the first half of 2009 Temirbank was ranked 78th by assets among the CIS banks and 10th among the Kazakh banks according to the Interfax-1000: CIS Bank ranking prepared by the Interfax Center of Economic Analysis; BTA Bank was ranked 8th and 1st respectively.

SOURCE: http://www.interfax.kz/?lang=eng&int_id=10&news_id=3478



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