AUG. 10 2011 (The Conway Bulletin) – Attention may have focused on Western Europe and the US but Central Asia’s biggest financial centre, Kazakhstan, did not escape the turmoil that has gripped world financial markets over the last week.

A ratings downgrade for the United States and worries about eurozone debt have spooked investors. There has been a flight to safety — gold and the Swiss Franc have boomed — as investors have become more wary of risk. Not good news for emerging markets, then.

Tellingly, Kazakhstan has been one of the worst hit stock markets in the world. Between Aug. 1 – 9 Bloomberg data showed the Kazakhstan Stock Exchange (KASE) lost about 22% of its value.

To throw in a few numbers, KASE — which includes the state oil and gas company Kazmunaigas, miner ENRC, copper producer Kazakhmys and the country’s biggest banks — is now valued at around 63% of its mid-February value. Many of the companies listed on KASE have their main listing on the London Stock Exchange where the drop was far less dramatic.

KASE recovered 7% of its value on Aug. 10 but it hasn’t been this low since the start of March 2009 when the world was tentatively starting to emerge from the global financial slowdown.

Of course volatile oil prices play their part in pushing KASE up and down but so does general investor sentiment and they worry about emerging market risk.

KASE may be a relatively minor stock market but it is still a decent weather mast. That said, emerging markets with their potential for high growth rates will always attract investors.

ENDS