OCT. 6 2015 (The Conway Bulletin) – Data from the Russian Migration Service showed a 17% fall in Uzbek migration into Russia during the first 9 months of 2015 compared to the same period last year. The economic downturn in Russia and the fall in the rouble-dollar exchange rate have discouraged Uzbek workers from travelling to Russia for jobs.
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(News report from Issue No. 251, published on Oct. 9 2015)
OCT. 7 2015 (The Conway Bulletin) – Armenia will keep its interest rate at 10.25% or higher in the medium term to beat rising inflation and maintain stability, media quoted Nerses Yeritsyan, deputy chairman of Armenia’s Central Bank, as saying. Regional pressures have dented economic growth across the S.Caucasus.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 251, published on Oct. 9 2015)
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.”
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 250, published on Oct. 2 2015)
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.
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(News report from Issue No. 250, published on Oct. 2 2015)
SEPT. 30 2015 (The Conway Bulletin) – Azerbaijan’s oil production fell by 3.1% between January and August this year compared to the same period in 2014, a source at the state’s Statistics Committee told Reuters, more bad news for the government as it tries to work out a strategy to deal with a regional economic downturn.
Oil exports are the mainstay of the Azerbaijan economy, and a collapse in oil prices over the past year has hit it hard.
It has cut government projects, slashed the value of its currency by a third and warned of low growth rates for the next couple of years.
Alongside the decline in revenue earned from exports, Azerbaijan is also dealing with a drop in production. This drop is mainly linked to a slowdown in production at the Azeri-Chirag-Guneshli (ACG) fields which are operated by BP.
The source told Reuters that Azerbaijan had produced 22.1m tonnes of oil in the first eight months of the year compared to 22.8m tonnes in 2014.
BP has tried to increase outflows from ACG over the past couple of years but without success, drawing criticism from Azerbaijani President Ilham Aliyev.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 250, published on Oct. 2 2015)
ALMATY, OCT. 2 2015 (The Conway Bulletin) — Kazakhstan’s Central Bank raised its new key interest rate to 16% from 12% in an attempt to contain rising inflation.
The increase in the overnight repo rate, made the key interest rate in September, highlights how heavily the Central Bank underestimated the rate that inflation would rise after a devaluation of its tenge currency in August. The tenge is now trading at 272/$1 compared to 188/$1 before it was cut from its US dollar peg on Aug, 20.
“Considering the economic data and prospects for growth the National Bank decided to raise its key interest rate to 16% to keep inflation in the medium-term target range of 6-8%,” the Central Bank said in a statement.
But bolstering the strength of the tenge may have been the Kazakh Central Bank’s main objective for the interest rate rise. Despite promising not to intervene in the currency markets after ditching the US dollar peg, the Kazakh Central Bank has spent $1b propping up its currency and keeping it away from the 300/$1 floor that it has threatened to fall through.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 250, published on Oct. 2 2015)
SEPT. 30 2015 (The Conway Bulletin) – Preliminary GDP data for August showed that growth in Georgia measured 2.3% compared to the same month in 2014, the Georgia statistics agency said. This was the slowest year-on-year GDP growth since May.
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(News report from Issue No. 250, published on Oct. 2 2015)
OCT. 1 2015, ALMATY (The Conway Bulletin) — The collapse in the value of the Kazakh tenge over the past 18 months has not only hurt businesses and consumers in Kazakhstan. Charities that collect cash in tenge but accrue costs in US dollars and other foreign currencies are also having to cut services — often life-saving ones.
In an interview with The Conway Bulletin, Ilyas Kubriyanov, head of the UnityKZ charity, said that the cost of sending ill children abroad for treatment had spiralled.
“We are having problems, of course, as foreign hospitals invoice in dollars but we collect 90% of our donations in tenge,” he said. “Consequently, the cost of treatments is increasing.”
UnityKZ helps pay for children who have cancer or other serious illnesses to travel abroad for treatment. Mr Kubriyanov, who set up the charity in 2009, said that there are currently 10 children waiting for treatment.
“Because of the currency situation, the money we collect loses its impact,” he said. “Everything has become much more expensive.”
The Kazakh Central Bank released the tenge from its US dollar peg in August, triggering a sharp devaluation. It is trading at around 272/$1 compared to 188/$1 on Aug. 19.
It also devalued its currency in February 2014. The tenge is now worth nearly half its Feb. 2014 value.
A sharp drop in oil prices and a recession in Russia has battered economies in Central Asia and the South Caucasus. Statistics show unemployment and inflation rising but the impact is felt across Kazakh society.
“Recently, we asked parents of sick children to think about another type of treatment to have or another country to aim for,” Mr Kubriyanov said. “One child was transferred to China recently, but they also have some difficulties with their currency there.”
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 250, published on Oct. 2 2015)
SEPT. 29 2015 (The Conway Bulletin) – Currency reserves held by Armenia’s Central Bank have dropped to $1.646b from $1.703b at the start of the month, despite it insisting that it was not intervening in the currency market to support the dram. A year earlier, the CBank’s currency reserves measures $1.75b.
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(News report from Issue No. 250, published on Oct. 2 2015)
SEPT. 29 2015 (The Conway Bulletin) – Remittances to Armenia from abroad dropped by 38.8% in the first eight months of the year to $114.8m compared to the same period in 2014 , the Armenian Central Bank said. Russia provides nearly 80% of all Armenia’s remittances. It has been coping with the fallout from a collapse in oil prices and sanctions.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 250, published on Oct. 2 2015)