DEC. 8 2015 (The Conway Bulletin) – At a government meeting, Kazakh Central Bank chief Daniyar Akishev said all prices should be given in tenge. One of Mr Akishev’s main objectives is to make the tenge more prominent and to de-dollarise the economy. Many goods and services — rent, hotel rooms and luxury goods — are still priced in US dollars.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 11 2015 (The Conway Bulletin) — The Kazakh tenge keeps hitting record lows against the US dollar, trading around the 310/$1 mark in the second half of this week, and there is little indication that it will reverse this trend. The Central Bank has said it wants to scrap its previous monetary policy and find new solutions. The message it sent was, in essence: “we will play it by ear.” So much for restoring confidence in its monetary policies.
The Kyrgyz som stopped its fall and found its equilibrium at 75.6/$1 this week, the first stable week in months.
All other currencies were steady this week.
Next week, the US Federal Reserve Bank will hold a policy meeting. Analysts are bracing for the first interest rate rise since 2009.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 8 2015 (The Conway Bulletin) – Kazakh economy minister Yerbolat Dossayev said Kashagan would restart production by end-2016. His statement reinforces previous statements from the Kazakh government which have been more optimistic on the Caspian Sea oil field’s start date than Western companies.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 10 2015 (The Conway Bulletin) — Ukraine’s Antimonopoly Committee said it gave permission to an unnamed private investor from Kazakhstan to buy 50% of BTA Bank Ukraine. BTA Bank in Kazakhstan owns 49.9% of BTA Bank Ukraine. The rest of the shares are indirectly owned by several murky Ukrainian investment companies.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 8 2015 (The Conway Bulletin) — Kenes Rakishev, a well-connected businessman in Kazakhstan, said he is in talks to buy Sedmoi Kanal (Channel 7), a popular television channel focusing on education and entertainment. In July 2015, Channel 7 stopped broadcasting information and analytical programmes due to low market demand.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 8 2015 (The Conway Bulletin) – Iran could send most of its enriched uranium supply to Kazakhstan under a US-negotiated deal that would allow sanctions to be lifted, the Wall Street Journal reported quoting sources. Iran has to transfer its enriched uranium to a third country to comply with conditions to remove sanctions.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 7 2015 (The Conway Bulletin) – In tenge terms, prices for new housing in Kazakhstan have risen on average by 12% in the year to the end of November, media reported quoting the national statistics agency. The rise is a reflection of the devaluation of the tenge and also of rising inflation. The tenge has lost around 40% in value this year.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 11 2015 (The Conway Bulletin) — Oil prices fell by almost 10% to under $40/barrel this week — its lowest price since 2009. This hit several of the region’s energy companies who were already dealing with a sharp slump in their share prices.
Tethys Petroleum closed at 4.38p on Thursday, down 2.7% in one week. Roxi Petroleum continued to decline, closing at 6.38p on Thursday, down 8.9% on the week. Nostrum Oil & Gas shares lost 3% to close at 369.5p.
Commodity companies were hit by the general downturn in the market and the news of giant miner Anglo American scaling down operations dramatically. Gold prices fell again by 2% this week, hitting $1,067/ounce.
This affected Kazakhstan-focused mining companies such as Central Asia Metals and KAZ Minerals, which lost 8.9% and 3.8% respectively this week. Kyrgyzstan-focused miner Centerra Gold surged 4%in the Toronto Stock Exchange to 7.94 Canadian dollars, against the trend of other companies, perhaps rallying on its positive results in the first three-quarters of the year.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 7/10 2015 (The Conway Bulletin) – Ratings agencies Standard & Poor’s and Fitch said that worsening economic conditions in Kazakhstan threaten to generate bad debt that could drag down the banking sector.
The warnings add to the mounting analysis which suggest that the initial impact of low oil prices and a recession in Russia were underestimated. Last week the World Bank said that the Kazakh economy would grow by its lowest rate since the 1990s.
Specifically Standard & Poor’s downgraded the rating of Almaty-based Eurasian Bank to B from B+ because of an increase in its non- performing loan portfolio.
“The level of non-performing loans increased to 11.1% of total loans on Nov. 1, 2015 from 7.5% on Jan. 1, 2015,” it said in a statement.
Non-performing loans are those which are more than 90 days overdue.
After the Global Financial Crisis of 2008/9, Kazakhstan’s banks held portfolios with the largest proportion of non-performing loans in the world. It had managed to reduce this before the onset of the current economic malaise.
But the current economic problems have slowed this recovery.
Similarly to the World Bank last week, Fitch said the Kazakh economy would grow by just 1% this year.
“Medium-term prospects for Kazakhstan’s banking system have deteriorated in 2015 due to lower oil prices, the economic slowdown (especially in non-extractive sectors) and the weaker tenge,” it said in a statement.
Unlike the World Bank, though, it did say the recovery would be quicker and that the Kazakh economy would grow by 2.3% in 2015, compared to a World Bank estimate of 1.1%.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 9 2015 (The Conway Bulletin) – The tenge/$ rate has reached a balanced position, Kazakh PM Karim Massimov said, suggesting that the national currency will not lose much more value against the US dollar. By Dec. 9, the tenge traded at around 309/$1. It has lost around 40% of its value this year.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 260, published on Dec. 11 2015)