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Kazakhstan discouts CPC crude at loss

JUNE 8 2017 (The Bulletin) — Light CPC crude oil is being sold at an increasingly heavy discount because the Kashagan project needs to increase output despite low oil prices, various traders told Reuters. In the article, the traders said that it was simply cheaper for Kazakhstan to discount CPC crude than cut back on Kashagan output which only came onstream last year after a series of setbacks. Traders said that CPC crude, considered high quality, had been sold at a premium of $0.15/barrel in 2013. In the 2014-16 downturn this dropped to a discount of $0.11-$0.18 but was now being sold at a discount of $1.23 because of the oversupply.

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(News report from Issue No. 332, published on June 12 2017)

China buys first bank in Kazakhstan with swoop for Altyn

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ALMATY, JUNE 8 2017 (The Bulletin) — Chinese Citic Bank Corp completed the purchase of a 60% stake in Altyn Bank from Halyk Bank for an undisclosed amount, marking China’s first investment in the Kazakh banking sector.

The deal also lays down yet another marker of intent by China over its push to develop Central Asia, and in particular Kazakhstan, as the fulcrum of its ‘One Belt. One Road’ development policy. It envisions a new Silk Road, connecting China and Europe, which means developing infrastructure in Kazakhstan.

This is also China’s first bank deal in Kazakhstan and comes in the midst of a lack of confidence in the Kazakh banking sector, linked to a three year-long economic downturn. China’s CITIC bank has not commented but Umut Shayakhmetova, the Altyn Bank CEO, did.

“Within the ‘One Belt. One Road’ Chinese initiative we are seeing Kazakh companies expressing a clear desire to develop their business in China as we continue to follow the needs of our clients,” she said.

The deal was announced last year.

Altyn Bank is described as a medium-sized lender with assets of $930m. Halyk Bank said it would retain a 40% stake in the bank. Altyn Bank was formed in 2014 when Halyk bought HSBC Kazakhstan.

China’s ‘One Belt. One Road’ policy has lead to a rush of Chinese deals in Kazakhstan. COSCO Shipping Corporation and Jiangsu Lianyungang Port Co bought a 49% stake in the Khorgos dry port on the Kazakh-Chinese border last month and this month the Shanghai Stock Exchange said it would buy a 25.1% stake in the Astana Stock Exchange.

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(News report from Issue No. 332, published on June 12 2017)

Georgia, Azerbaijan, Turkey begin military exercises

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JUNE 5 2017 (The Bulletin) — Soldiers from Georgia, Turkey and Azerbaijan started their annual military exercises, dubbed Caucasian Eagle 2017, highlighting improved ties between the three countries. This is the third military exercise between the triumvirate. Turkey has hosted the other two military exercises.

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(News report from Issue No. 332, published on June 12 2017)

Inter RAO sues Georgia

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JUNE 10 2017 (The Bulletin) — Russian energy company Inter RAO has begun proceedings at the Stockholm International Arbitration court against Georgia because of losses incurred at its two hydropower plants Khamri-1 and Khamri-2, Georgia’s deputy energy minister Mariam Valishvili told Retuers. It blamed the losses on the devaluation of the Georgian lari and on the government for blocking its move to increase electricity prices.

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(News report from Issue No. 332, published on June 12 2017)

Armenian exports rise

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JUNE 6 2017 (The Bulletin) — Exports from Armenia have increased by 16.1% in the first four month of the year compared to the same period in 2016, media reported quoting the national statistics service. Russia was still the biggest trade partner and China the second biggest. Like the rest of the region, Armenia has been shrugging off an economic malaise triggered by a fall in oil prices and a recession in Russia that has lingered from 2014.

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(News report from Issue No. 332, published on June 12 2017)

Armenia’s CB raises inflation target

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MAY 31 2017 (The Bulletin) — Armenia’s Central Bank raised its inflation target for 2017 to 2.5% from 0.6%, a leading indicator that it feels the worst of an economic downturn has passed. Armenia has been struggling to deal with deflation over the past couple of years. Recent data showed the economy starting to grow. The government targets 3.2% growth.

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(News report from Issue No. 331, published on June 5 2017)

Car imports to Kazakhstan drop

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MAY 29 2017 (The Bulletin) — Car imports from Russia into Kazakhstan dropped by 11% in the first quarter of the year to 4,700 cars, media reported. Reports said the drop in Russian car imports was mainly due to a sharp rise in prices linked to a drop in the value of the Kazakh tenge. In the first quarter of 2014, Kazakhstan imported 32,400 cars from Russia.

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(News report from Issue No. 331, published on June 5 2017)

Mkhitaryan receives award from Armenia

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MAY 28 2017 (The Bulletin) — Henrikh Mkhitaryan, the Manchester United footballer, received Armenia’s highest order for “Services to Motherland” at a ceremony presided over by Armenian President Serzh Sargsyan. Mr Mkhitaryan who has played for Manchester United for one season is arguably the world’s best-known Armenian. He is certainly the best footballer Armenia has produced and is the first Armenian to play in the English Premier League.

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(News report from Issue No. 331, published on June 5 2017)

Turkmen President sacks Supreme Court chief

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JUNE 2 2017 (The Bulletin) — Turkmen President Kurbanguly Berdymukhamedov sacked the head of the Supreme Court, Begench Charyev, just the latest in a string of high-profile sackings that he has made this year. State-owned media did not give a reason for Mr Charyev’s sacking. He had been head of the Supreme Court since September 2013. Gylychmyrat Halliyev director of the Turkmen National Institute for Democracy and Human Rights was appointed the new Supreme Court chief.

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(News report from Issue No. 331, published on June 5 2017)

Kazakh Banks make deal

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JUNE 2 2017 (The Bulletin) — Halyk Bank will buy Kazkommertsbank’s two largest shareholder’s combined stake of 54% for a nominal fee of $1, Reuters reported. The nominal fee highlights the state-sponsored natured of the merger, agreed in March, between the country’s two largest banks. Under the deal, a government unit set up to buy banks’ bad debt will buy 2.4 trillion tenge ($7.5b) of bad debt from the new bank. Kazkommertsbank’s two biggest shareholder are Kenes Rakishev, a financier close to the elite, and Samruk Kazyna, the sovereign wealth fund.

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(News report from Issue No. 331, published on June 5 2017)