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US dollar strength pressures currencies

SEPT. 24 (The Bulletin) — Currencies across the region ticked downwards, along with most Emerging Market currencies, because of renewed strength in the US dollar on expectations of an interest rate rise in December.

The soft weekly session forced the Azerbaijani manat, the Georgian lari and the Kazakh tenge to near year-lows. The manat was trading at 1.7170/$1, its lowest since mid-August; the lari was at 2.48/$1, its lowest since the start of August; the tenge was trading at 341/1/$1, also its lowest since the start of August.

The is also more trouble for currencies in the region brewing with news of a banking bail out in Russia. The bail out, itself, doesn’t bode ill but the prospect of the Russian economy being weaker than expected does. Russia’s economy is the regional economic driver. When it ails, so does the Central Asia and South Caucasus region.

The Uzbek soum, liberated from its US dollar peg at the beginning of the month, appears to have found its footing at around 8,077/$1. It has traded in a tight corridor since then.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017

Markets – Caspian Sunrise shares rise 48%

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SEPT. 24 (The Bulletin) — Central Asia Metal’s $402.5m purchase of a zinc mine in Macedonia dominated the company news file this week. That said we are still waiting for its impact on Central Asia Metal’s shares. Trading was suspended before the announcement and is not due to restart on London’s AIM until Monday.

In other news, oil producer Caspian Sunrise saw its share price jump by 48% after it said that revenues for the first six months of the year had tripled to around $2.8m.

In Georgia, TBC Bank finished up slightly at 1,639p, off an earlier 6-week high in the week of 1,680p. Georgia Healthcare was also up by 3.2% at 320p but this is still bumping around last week’s 2017 low of 310p.

Bank of Georgia ended the week at 3,303p – its lowest level since April.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017

Mirziyoyev tells forced cotton labourers to go home

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TASHKENT/SEPT. 22 (The Bulletin) — Uzbek President Shavkat Mirziyoyev ordered forced labourers working in the country’s cotton fields to return home, taking a step towards banning the practice altogether.

A Conway Bulletin correspondent said that the order for forced labourers — mainly teachers, medical staff and students — to leave the fields didn’t impact the wider mass mobilisation of the workforce to pick Uzbekistan’s cotton, a mobilisation that is characterised by low wages and poor conditions.

The Conway Bulletin, through its Silk Road Intelligencer newswire, had been one of the first news agencies to the report the news. The next day, on Sept. 23, Uzbek PM Abdulla Aripov confirmed the order.

“It’s forever,” he was quoted by Reuters as saying. “Students should study, state employees should work.”

The use of forced labour in Uzbekistan’s cotton fields has infuriated human rights groups who successfully lobbied for Western clothing companies to stop buying Uzbek cotton.

In the last few years, though, Uzbek officials and officials from the UN’s International Labour Organisation (ILO) have said that the use of forced labour has been cut back.

Human rights groups have published evidence that dispute this.

Under Pres. Mirziyoyev, Uzbekistan has appeared to lurch towards a more free and open society, rejecting the authoritarian tendencies of Islam Karimov who ruled from the 1991 break-up of the Soviet Union until his death in Sept. 2016.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017

Air Cairo to fly regularly to Tbilisi

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SEPT. 22 (The Bulletin) — Air Cairo, Egypt’s low-cost airline, will launch a regular flight to Tbilisi from November. The flight will connect Egypt and Georgia directly by air regularly for the first time. This year, airlines from the Middle East have been rushing to boost connections with Georgia. Georgia is increasingly popular with Middle Eastern tourists wanting a cool, pseudo-European escape from the summer heat and also with businessmen looking for improved access to the EU and Russia.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017

Kazakhstan reduces Kashagan output expectations

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SEPT. 22 (The Bulletin) — Kazakhstan’s Kashagan oil field will produce 270,000 barrels of oil per day during the last quarter of the year, Kazmunaigas told Reuters, less than a previous figure of 300,000 – 370,000 barrels suggested by energy minister Kanat Bozumbayev. Kashagan is the major Caspian Sea oil field that Kazakhstan hopes will propel it into the Premier League of global oil producers.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017

Georgia’s Parliament weakens Georgian Dream constitutional changes

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SEPT. 22 (The Bulletin) — In what is being described as a major victory by opposition parties in Georgia, Parliament agreed to water-down the ruling Georgian Dream’s planned constitutional changes and allow blocs to contest the next parliamentary election in 2020. Georgian Dream had wanted to ban election blocs. It also ditched plans enforce the so-called Bonus System, which hands all votes from parties failing to pass a 5% threshold to the winning party, from the 2024 election.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017

Swedish prosecutors charge ex-Telia CEO with corruption in Uzbekistan

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SEPT. 22 (The Bulletin) — Swedish prosecutors charged former Telia CEO Lars Nyberg, former deputy CEO and head of its Eurasia division Tero Kivisaari and a third unnamed senior executive with authorising bribe-paying to access Uzbekistan in 2007/8. The charges came a day after Telia agreed to pay a fine of $965m to settle the bribe-paying allegations.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017

Central Asia Metals agrees deal to buy Macedonian zinc mine

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ALMATY/SEPT. 22 (The Bulletin) — Kazakhstan-focused Central Asia Metals agreed to buy Lynx Resources, which owns a zinc mine in Macedonia, from Bermuda-based fund Orion Co-Investments III and Swiss firm Fusion Capital for $402.5m.

The deal is the biggest merger or acquisition in the Central Asia region this year and highlights the boom year that metal producers and miners have enjoyed.

Nick Clarke, CEO of Central Asia Metals, said that buying Lynx was a perfect fit and the result of extensive research on how to expand.

“We believe that this transaction is an exceptional opportunity for Central Asia Metals to acquire a high quality asset which complements our existing business,” he said in a statement.

The deal will be financed through a mixture of equity and debt.

Kenes Rakishev, a Kazakh investor with close ties to Kazakhstan’s elite, has been the biggest stakeholder in Central Asia Metals with a 19% stake. Under the deal, he will have to sell around half his stake.

The London-listed Central Asia Metals has performed well this year, rising 10.4% to 254.5p before trading was suspended on Sept. 4 following rumours of a takeover.

When trading begins again on Monday, Central Asia Metal’s share price is expected to rise.

Central Asia Metals’ main assets have been a copper slag heap in Kazakhstan. Analysts said buying up Lynx would mean diversifying its portfolio, an essential move.

“The transaction serves to diversify Central Asia Metal’s jurisdictional and commodity exposure and whilst it appears they have paid full price, they have also acquired an asset with good economics and long life,” the Telegraph quoted analysts at Numis as saying.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017

Former Kazakh PM released early from prison

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SEPT. 21 (The Bulletin) — Former Kazakh PM Serik Akhmetov was released from prison in Karaganda only two years into a 10 year sentence for corruption. Akhmetov was convicted in 2015 in a high-profile trial that highlighted the country’s endemic problem with corruption. He was PM from September 2012 until April 2014. Earlier in September, a court in Karaganda said that Akhmetov should be released but that he will face limitations on his freedom.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.

— Copyright the Central Asia & South Caucasus Bulletin 2017

Telia agrees to pay $965m fine to US authorities over Uzbek corruption

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SEPT. 21 (The Bulletin) — In a settlement with the US authorities, Swedish telecoms company Telia agreed to pay a fine of $965m for bribing its way into the Uzbek mobile market in 2007/8. The fine is smaller than had first been mooted. Telia paid a Gibraltar-based company ultimately owned by Gulnara Karimova, the daughter of former Uzbek leader Islam Karimov, at least $330m.

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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.