Tag Archives: Kazakhstan

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)

Kazakh Central Bank raises interest rates

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.

ENDS

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

Cell repays loan to Kazakh banks

SEPT. 28 2015 (The Conway Bulletin) — Kcell, one of the biggest players in Kazakhstan’s telecoms market, appears to re-organising its debt. It repaid a syndicated loan worth 14.8b tenge ($55m) to Citibank Kazakhstan and RBS Kazakhstan, days after opening a 17b credit line with Kazkommertsbank. Sweden- based TeliaSonera owns 62% of Kcell. It said last month that it wants to quit Eurasian markets.

ENDS

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

OPEC asks Kazakhstan for oil cut

SEPT. 30 2015 (The Conway Bulletin) – Vladimir Shkolnik, the Kazakh energy minister, said OPEC members asked Kazakhstan to cut its oil production in a coordinated attempt to increase oil prices. Kazakhstan has said oil production would be slightly lower this year.

ENDS

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

Kazakhstan to cut in tax for oil producers

SEPT. 29 2015 (The Conway Bulletin) – The Kazakh government has said it is considering cutting taxes for oil producers to encourage them to raise output. Some energy companies operating in Kazakhstan, especially the smaller ones, have said they will not produce oil until prices recover. Kazakhstan has cut its projected oil production in 2015 by 1m tonnes to 79.5m tonnes.

ENDS

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

OSCE complains to Kazakh government

OCT. 1 2015 (The Conway Bulletin) – The OSCE, Europe’s main election and media rights watchdog, sent a note to the Kazakh government asking it not to cut access to news website which have been critical of the authorities. The OSCE has previously criticised Kazakhstan for is media rights record.

ENDS

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

Falling Kazakh tenge hits charities

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.”

ENDS

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

YouTube kicks off in Kazakhstan

SEPT. 30 2015 (The Conway Bulletin) — Google launched youtube.kz, a Kazakh language version of video streaming service YouTube. Maxim Machkasau, development manager for Google in Kazakhstan, said: “YouTube is very popular in Kazakhstan, especially among people aged 18-24 years.” But social media has come under scrutiny in Kazakhstan for being used by radicals to spread extremist Islamic propaganda.

ENDS

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

Currency: Kazakh tenge, Kyrgyz som

OCT. 1 2015 (The Conway Bulletin) — It’s hard to believe that Kazakhstan has really moved to a free-floating currency market. The roller-coaster of the past 40 days has hit the Central Bank’s credibility. Investors and citizens alike are wary of the potential consequences of their tenge-denominated portfolios.

And over the last two weeks, the Central Bank has sold around $1b to keep the tenge away from the frightening 300/$1 floor it momentarily touched on Sept. 16.

The tenge has since traded at around 271/1$. In August, the Central Bank chose to move away from a dollar peg of around 188/$1 to avoid draining its reserves. Now, it seems, the tenge has found another, unofficial, peg.

In other countries, the situation was fairly stable this week. The Kyrgyz som kept its rate through the week at around 69/$1. The Georgian lari held below 2.39/$1.

In Tajikistan, the Central Bank seems to be allowing a weekly 0.5% decline for the somoni, now at around 6.5/$1.

And finally, in a recent Central Bank survey, 41% of Tajikistan’s population is in favour of letting the somoni float free.

ENDS

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

Kazakh President’s son-in-law takes Olympic role

SEPT. 26 2015 (The Conway Bulletin) – Kazakhstan’s Olympic Committee reportedly appointed Timur Kulibayev, son-in-law of President Nursultan Nazarbayev and a potential successor, as its head. Earlier this year Almaty lost to Beijing in its bid to host the 2022 Winter Olympics. The bid boosted both the profile of Kazakhstan and also of its Olympic Committee.

ENDS

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