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Kazakh CB blames rouble for tenge fall

AUG. 2 2017 (The Bulletin) — Kazakhstan’s Central Bank said that speculation over the Russian rouble had forced a depreciation of the tenge. By the end of trading on Aug. 4, the tenge was trading at 332.91/$1, down from around 310/$1 at the end of May. Kazakhs have openly started to worry about a repeat of the devaluation of 2015 that wiped 50% off the value of the currency.

ENDS

(News report from Issue No. 336, published on Aug. 5 2017)

Gulnara was imprisoned in 2015 says Uzbek prosecutor

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TASHKENT, JULY 28 2017 (The Bulletin) — In a rare public statement, Uzbekistan’s Prosecutor-General said that Gulnara Karimova, once considered a potential successor to her father President Islam Karimov, had been tried and found guilty of various financial crimes in August 2015.

Karimova has not been seen or heard of since being placed under house arrest in Tashkent in March 2014. Rumours had even circulated around Tashkent in the months after her father’s death from a heart attack in September last year that she had been poisoned.

The Prosecutor-General’s statement said that the globe-trotting self-styled diva had been the head of a crime gang. “Under the control and assistance of Karimova G. members of an organised crime group committed a number of crimes between 2001 and 2013,” it said.

At one time, during the height of her powers, Karimova had acted as the unofficial gatekeeper to Uzbekistan, demanding bribes of hundreds of millions of dollars for market access. Swedish-Finnish mobile operator Telia is selling out of its FSU subsidiaries because of the reputational damage caused by a series of investigations showed that it had paid Karimova $300m to set up a company in Uzbekistan in 2007/8.

Always despised by ordinary Uzbeks who hated her opulence while they struggled, the latest revelations about her wealth have further dented her reputation.

In Tashkent, a Bulletin correspondent said that people reacted with disgust and fury about the news the Karimova had headed a gang that had stolen and extorted hundreds of millions of dollars.

“I am outraged reading today’s news,” said a 31-year-old teacher.

“My neighbour was sentenced to seven years for eluding taxes worth just 10m soum ($2,500). Imagine seven years for just 10m soum and five years for a nationwide raid. What justice?”

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(News report from Issue No. 336, published on Aug. 5 2017)

A man shots dead people in Armenia

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AUG. 1 2017 (The Bulletin) — A man shot dead at least four people at a funeral in rural Armenia after a suspected row over loans, media reported. At least eight other people were injured in the shooting at the Yazidi funeral. The attack is potentially the worst mass murder in Armenia since a Russian soldier stabbed to death a family of seven near a Russian military base in the city of Gyumri in 2015.

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(News report from Issue No. 336, published on Aug. 5 2017)

Azerbaijan’s CB keeps interest rates steady

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AUG. 1 2017 (The Bulletin) — Azerbaijan’s Central Bank kept its key interest rate at 15% saying that it had seen some improvements in key economic indicators over the past few months. Specifically, it said that growth in the non-oil sector had been 5.4% in the first half of the year, 3.7% increase in trade volumes and 2.2% increase in agriculture. The Central Bank said, though, that inflation remained a concern.

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(News report from Issue No. 336, published on Aug. 5 2017)

Wife of detained Kazakh businessman claims torture

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JULY 31 2017 (The Bulletin) — Jamilya Aimbetova-Tokmadi, the wife of the detained Kazakh businessman Murathan Tokmadi, said that her husband had been beaten and forced to sign a testimony that his injuries were linked to a fall from a pull-up bar. The arrest of Mr Tokmadi for various financial crimes in mid- June surprised commentators. The owner of a major glass-making factory in Almaty had appeared on good terms with the authorities before his arrest. The authorities have not commented on the claims.

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(News report from Issue No. 336, published on Aug. 5 2017)

Kazakh economy improving says mobile operator Kcell

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ALMATY, JULY 20 2017 (The Bulletin) — Macroeconomic conditions in Kazakhstan are improving, Kcell, the Kazakh mobile operator part-owned by Swedish-Finnish Telia, said in its first half report, an important view of Central Asia’s biggest economy.

Kcell’s revenue from sales was down by 1.1% in the first half of the year compared to the same period in 2016 at 71.54b tenge ($219.5m) but this was due to changes in tariffs and the tough market conditions in mobile operations.

More importantly, Kcell CEO Arti Ots said, the economy was starting to show sustained growth after three years of stagnation.

“In the first half of 2017, we saw continued improving trends in both macroeconomic indicators and the market environment in Kazakhstan,” he said. “In the domestic telecoms market, as previously reported, ongoing tariff adjustments are starting to give a positive impact, which we expect to see the results of in the second half of the year.”

Kcell reports are watched carefully by analysts as they are considered to give a balanced corporate view of Kazakhstan’s economy. Like the rest of the region Kazakhstan has been trying to shake off a tough three years linked to a collapse in oil prices and a recession in Russia.

Economists have also said the outlook for Kazakhstan has improved this year. The Kazakh Central Bank has said inflation is easing and the World Bank has estimated that GDP will grow at around 2.2% this year, compared to 1% in 2015 and 2016.

Kcell is fighting a 9b tenge fine for late payment of taxes in 2012-15 handed out this year by the Kazakh authorities, which it says is unfair. It said in its H1 report that it didn’t expect to have to pay the full fine. Telia is looking to sell its stakes, owned directly and indirectly, in Kcell after a corruption row focused on its operations in Uzbekistan tarnished its reputation.

ENDS

(News report from Issue No. 337, published on July 27 2017)

Currencies: Uzbekistan’s soum

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JULY 27 2017 (The Bulletin) — So, it looks like we already have the big currency story of the year for the region. At least, that is, unless something goes terribly wrong with some of the more wobbly currencies out there – mentioning no names – Azerbaijan, Turkmenistan and even Kazakhstan.

The IMF returned from a mission to Tashkent saying that the government there was fully intending to relax currency exchange regulations that have strangled foreign investment. The official rate of the Uzbek soum is now just over 4,000/$1. The unofficial rate is more than double. How they merge is going to be the story to watch.

In the meantime, if anybody has missed it, it is clear that the Uzbek Central Bank has been managing a steady devaluation of its currency. The chart below shows the steps it has been making to devalue it – by more than 25% since the end of January.

On the equities front, KAZ Minerals continues to outperform, mainly because of another surge in copper prices.

ENDS

(News report from Issue No. 337, published on July 27 2017)

LSE courts Kazkahstan

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JULY 17 2017 (The Bulletin) — Greg Hands, Britain’s trade and investment minister, lead a delegation to Kazakhstan in an apparent attempt to woo Kazakh state-owned companies that are considering IPOs to list on the London Stock Exchange. The London Stock Exchange has made little attempt to disguise its attempts to attract Kazakh companies to London despite previous problems with Kazakh corporate governance.

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international(News report from Issue No. 337, published on July 27 2017)

China to pay for new Tajik parliament

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JULY 19 2017 (The Bulletin) — Tajikistan said that China had agreed to give it $230m to build a new parliament building in Dushanbe, more evidence that Beijing is exerting increasing influence in Central Asia by spending billions of dollars on various infrastructure and investment schemes. Earlier this year Tajikistan said that Saudi Arabia was prepared to pay $200m to fund the new parliament building.

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(News report from Issue No. 337, published on July 27 2017)

Uzbekistan’s and Germany’s Siemens signs MoU

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JULY 24 2017 (The Bulletin) — Uzbekistan and Germany’s Siemens signed a memorandum of understanding to boost cooperation in the railway sector. The specifics of the deal were thin but it is being seen as a step towards more projects for Siemens in Uzbekistan.

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(News report from Issue No. 337, published on July 27 2017)