Tag Archives: business

Georgian property market slumps on worsening economy

SEPT. 30 2015, TBILISI (The Conway Bulletin) — Real estate prices in the Georgian capital have fallen by 15% this year, a drop that industry insiders blame on the collapse in the value of the lari currency.

In an interview with The Conway Bulletin, Anna Jalagonia, president of the Georgian Association of Realtors, said a 40% fall in the lari since last summer had spooked foreign investors.

“Investors prefer to wait because of the unstable situation in the country,” she said.

This bodes badly for Georgia, whose economy is to a large extent dependent on foreign investment.

Like the rest of the region, a slump in oil prices and the sluggish economic performance of Russia, the region’s main driver, has undermined Georgia’s economy. The Central Bank has spent millions of dollars trying to protect the value of the lari, inflation is rising and GDP growth rates are being revised down.

Neli Goguadze, director of the real estate agency Kibe, said that the situation in Georgia’s real estate sector had reached a tipping point.

“The problems began a few months ago due to the devaluation of the national currency,” she said. “For there to be a revival, the market needs a serious boost.”

Last month, the Central Bank increased its key interest rate to 7%, it’s highest rate since December 2011, as it tried to support the lari.

But some real estate analysts said that this interest rate increase may actually cause more problems.

“Real estate transactions are usually made in US Dollars,” said Papuna Kokhtashvili, owner of the Georgian franchise of US-based RE/MAX Property Advisors. “The increase in interest rate for loans results in a reduction of demand for property.”

And is could get worse, as Ms Jalagonia of the Association of Realtors explained during her interview.

“At the end of the year the situation will be worse as the national currency rate will continue to influence the market and winter and the fall are usually slow times for real estate acquisition. That combined will be a problem,” she said. “Prices for residential real estate have already fallen by about 15% and will continue to decline.”

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)

Chinese cement to expand in Tajikistan and Uzbekistan

SEPT. 29 2015 (The Conway Bulletin) — Shangfeng Cement, a Chinese cement producer, aims to raise 1.5b yuan ($235m) to fuel its expansion into Tajikistan and Uzbekistan. The two projects Shangfeng plans in Central Asia both have a capacity to produce 3,200 tonnes of cement per day and will cost around $130m. Shangfeng plans to sell its cement in Tajikistan, Uzbekistan and northern Afghanistan.

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)

Finnish company wins tender in Kazakhstan

SEPT. 25 2015 (The Conway Bulletin) — Finnish-based Wärtsilä won a tender to build a 40MW combined heat and power (CHP) plant near the Caspian port of Aktau, in west Kazakhstan. The Kazakh company KazAzot will manage the plant, which Wärtsilä plans to complete in late 2016. The plant will power the city of Aktau and its industrial hub.

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)

Iran carmaker fancies Tajikistan

SEPT. 28 2015 (The Conway Bulletin) — Iran Khodro Industrial Group (IKCO) will export 500 cars to Tajikistan later this year as a test run ahead of potentially investing in a production site, Iranian media reported. The private company based in Tehran manufactures the Samand brand of family cars. Saeed Tafazzoli, the company’s deputy CEO, said he wants to take the brand into Central Asia.

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)

Kyrgyz minister complains about “flood” of imports

BISHKEK, SEPT. 25 2015 (The Conway Bulletin) — Alluding to concerns about the impact of the Kremlin-lead Eurasian Economic Union, Kyrgyzstan’s deputy PM Vladimir Dil said cheap products from Russia and Kazakhstan have been flooding the market.

Many politicians and government officials in Kyrgyzstan were sceptical in August about the benefits of joining the trade block that includes Russia, Kazakhstan, Belarus and Armenia. Some said that the Kremlin views the Eurasian Economic Union as a political project and that it pressured Kyrgyzstan, which has become increasingly reliant on Russia for economic and military support, into joining.

Now Mr Dil has stepped out and seemingly openly criticised the Eurasian Economic Union.

“We are seeing a very large flow of goods from Kazakhstan and Russia to our side. The changes in the exchange rates of the rouble and the tenge has turned goods in markets of our allies far cheaper than ours,” Mr Dil said. He didn’t explicitly mention the Eurasian Economic Union but the inference was clear. Kazakhstan cut its peg to a US dollar towards the end of August. The Kazakh tenge immediately lost around a quarter of its value.

A large drop in the value of the tenge and entry to the Eurasian Economic Union, it appears, has exposed Kyrgyzstan to cheap imports.

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)

Georgia’ energy minister meets with Gazprom

SEPT. 29 2015 (The Conway Bulletin) – Georgia energy minister Kakhaber Kaladze met up with Gazprom chairman Alexei Miller in Brussels to discuss Georgia’s role as a client and transit country for Russian gas. Media didn’t give details of the meeting but it did speculate that Georgia may be looking for help from the Kremlin to fill its energy deficit.

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)

Kazakh bank completes buyback

SEPT. 29 2015 (The Conway Bulletin) — Kazakh lender BTA Bank completed the buyout of its shares from Samruk- Kazyna by buying the final 4.26% stake that Kazakhstan’s sovereign wealth fund owned in it. Samruk-Kazyna bought BTA to save it from collapse during the Global Financial Crisis of 2008/9. Over the past year, Kazkommertsbank, another Kazakh bank, has merged with BTA Bank.

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)

Gazprom supplies gas to Azerbaijan

SEPT. 29 2015 (The Conway Bulletin) — Russian state-owned company Gazprom started supplying natural gas to Azerbaijan. Initial volumes stand at 6m cubic metres per day, the contract between the two parties envisages a maximum yearly supply of 2b cubic metres. Azerbaijan said the contract was struck because of economic growth and an increase in domestic consumption.

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)

Rout on commodities-based companies hits KAZ Minerals

ALMATY, SEPT. 30 2015 (The Conway Bulletin) — KAZ Minerals’ shares in London lost a fifth of their value over the past week as concerns about future commodities prices continued to stalk the market and copper prices fell to near 6-year lows.

Globally, Switzerland-based Glencore was the biggest loser in September with around $14b wiped off its market cap. The market pushed down Glencore shares mainly because of worries over its large debt pile but the sell-off still pressured other commodities-orientated companies including miners in the South Caucasus and Central Asia.

And the drop in commodities prices it also a sovereign issue in Central Asia and the South Caucasus with national budgets partially reliant on income from sales. This will hurt Kazakhstan in particular, although it will reverberate across the region.

Analysts were quick to point the finger at weak Chinese demand for commodities, especially copper, for the drop in prices. Copper is regarded as a good conductor of electricity and heat and used widely in manufacturing.

“With China slowing down and a lot of uncertainty, fears in the market have intensified, and the reduction in the pace of demand growth for all commodities has seemed to send everybody off the cliff,” Ed Hirs, professor of energy economics at the University of Houston told Bloomberg.

China uses more than half of world’s copper production and any fluctuation in its demand curve has significant effects in the markets. A strong US dollar and uncertainty over Fed interest rate decisions has also hit commodities prices.

London-listed KAZ Minerals, formerly known as Kazakhmys, is particularly exposed to Chinese copper demand whims. Its main product is copper and China is one of its main clients.

Shares in KAZ Minerals were down 20.5% in one week closing at 84.65p, its lowest ever price. It later rebounded above 90p, due to a wave of short-term rebounds across the sector.

KAZ Minerals/Kazakhmys has been portrayed as a company closely interlinked with the elite in Kazakhstan.

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)

Kyrgyz and Tajik CASA-1000 worries

SEPT. 25 2015 (The Conway Bulletin) – In an interview with a local newspaper, an official from Pakistan’s ministry of water and power said it was $142m short of its promised $297m investment for the so called CASA- 1000 power transit project. This is a serious concern for the project which is set to cost a total of $1.2b. If completed it will boost Tajikistan and Kyrgyzstan power exports to Pakistan and Afghanistan.

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)