Tag Archives: Kazakhstan

Markets: ADB’s growth outlook for the South Caucasus and Central Asia

SEPT. 22 2015 (The Conway Bulletin) — The Asian Development Bank published an updated Outlook for the economies of Central Asia and the South Caucasus, downgrading growth prospects across the region.

The ADB set growth for 2015 at 3.3%, down from an earlier forecast of 3.5% and the organisation says inflation will hit 8.1% this year, triggered by the latest devaluing of the Kazakh tenge and the Kyrgyz som. In Kazakhstan, in particular, “the new exchange rate is expected to dampen consumption and investment further,” the ADB said. A worrying outlook.

The trend for lower capital investments across the region, however, could be reversed in 2016-17, according to the ADB. The governments will play a major role as drivers of future growth as the main source of investments for years to come.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Business comment: Kazakhstan & The Oil Markets

SEPT. 23 2015 (The Conway Bulletin) — Low oil prices hit Kazakhstan again, as it revised downwards oil production numbers.

Iran’s re-emergence into the global markets will keep prices low according to a spokesperson from the Ministry of Energy in Astana and this means the Kazakhstan will lower production.

“Oil output is expected to reach 79.5m tonnes in 2015,” the spokesperson told Reuters. This is

1m tonnes less than earlier predicted and almost 2% less than in 2014. And it could get worse, as the government has not ruled out a further reduction in production, should prices continue to fall.

This has an adverse effect on Kazakhstan’s economy.

First, foreign investors reduce their financial positions because their assets lose value, either because of low oil prices or due to the devaluation of the local currency. Foreign investors have already started to leave Kazakhstan,

as TeliaSonera, Samsung, Honda, have shown in the past fortnight.

Second, the country’s financial position weakens further. It has to spend foreign reserves to protect its currency from falling further.

Third, the domestic oil sector marks some projects, which have been labelled uneconomic, as on- hold until oil prices rise. This, in turn, means lower revenues.

When it comes to oil, Kazakhstan is a price-taker. Its fate will depend on how it manages to survive what could be a long period of cheap oil.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Stock market: KAZ Minerals, Nostrum Oil & Gas

SEPT. 18-24 2015 (The Conway Bulletin) — KAZ Minerals shares, now trading at 101 pence, lost over 30% in one week, a fall sharper than the one it suffered last January, when it dropped by more than 25% in one day. Questions on China’s demand

for copper worried investors. Credit Suisse and BNP Paribas downgraded KAZ Minerals and reviewed downwards its target price. Goldman Sachs said there could be a potential upside on Friday and next week.

Nostrum Oil & Gas dropped a further 4% to 481 pence (Sept. 25), although an agreement with Tethys Petroleum seems closer after a company statement said the latest Nostrum offer priced each Tethys share at 0.147 Canadian dollars (Sept. 23).

Azerbaijan-based miner Anglo- Asian Mining gained 13% to 5.38 pence this week, after it published a promising H1 2015 report.

Kazakhstan-focused Roxi Petroleum continued its oil price linked slump, dropping by 4.3% to 8.5 pence this week in London.

In the GDR markets, Kazmunaigas E&P lost almost 20% this week, trading at $6.47 onFriday, almost certainly linked to Kazakhstan’s weak prospects in terms of oil production. Kcell fell by 13.4% finishing the week at $5.35 after TeliaSonera announced last week it would leave its Eurasian markets. TeliaSonera owns 62% of Kcell.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Moody’s drops Kazakhstan growth

SEPT. 22 2015 (The Conway Bulletin) – International ratings agency Moody’s lowered its growth prediction for Kazakhstan in 2016 to 2% from 2.2%. Moody’s kept its forecast for 2015 steady at 1.5%. Low oil prices have hit Kazakhstan’s budget and its ability to generate revenues.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Kazakh Central Bank wants loans in tenge

SEPT. 23 2015, ALMATY (The Conway Bulletin) — The Kazakh Central Bank presented a bill to parliament that will force people to take loans in tenge, a tactic it says is necessary to wean the economy off its addiction to US dollars.

Shaken by a 40% drop in the value of the tenge over the past 18 months, the Central Bank wants to ensure that commercial banks do not accrue a large amount of bad loans in US dollars as they did during the 2008/9 Global Financial crisis.

“This is an effort to protect customer’s rights and to decrease the rate of non-performing loans for second-tier banks,” Kuat Kozhakhmetov, deputy chairman of the Central Bank, said when he presented the bill to the parliament.

If the bill becomes law, people who have not earned their salary in a foreign currency for the 6 months before asking for a loan will will only be able to apply for a tenge loan.

According to a recent IMF study, almost 60% of the total loans issued by financial institutions in Kazakhstan are denominated in a foreign currency. The Central Bank also said that 14% of mortgages are currently denominated in foreign currencies.

People in Kazakhstan have used foreign currency loans to buy goods indexed to the US dollar or the Russian rouble, such as houses or cars. Salaries are often paid in tenge but are indexed to the US dollar.

A fall it the value of oil and a slump in the Russian economy has pressured the tenge and other regional currencies. Loans taken out in US dollars have become much more expensive to service.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

TeliaSonera companies reassure Kazakh, Uzbek, Azerbaijani customers

ALMATY, SEPT. 18-21 2015 (The Conway Bulletin) — Shortly after Swedish telecoms TeliaSonera said last week it was leaving Central Asia and the South Caucasus, its local brands were quickly reassuring worried customers they were not quitting altogether.

Azercell, Geocell, Kcell, Tcell and Ucell, TeliaSonera’s assets in Azerbaijan, Georgia, Kazakhstan, Tajikistan and Uzbekistan, all issued statements saying they will continue to operate.

Rumours still swirled but they focused on who would takeover TeliaSonera’s assets. Turkcell, which through Fintur is already a stakeholder in Azercell, Geocell and Kcell, is favourite. TeliaSonera also owns a stake in Fintur.

“To explore our strategic options to acquire the remaining stake in Fintur, we have initiated the process to appoint a strategic and financial advisor,” Turkcell said.

Analysts had mixed reaction. Some said TeliaSonera’s assets would attract decent bids, others that the poor state of the Kazakh economy would undermine their value.

Alexander Vasiliyev, editor of the website Profit.kz said Kcell would be a good buy for a global telecoms company.

“It continues to lay golden eggs, it is the largest player in the Kazakh market,” he told Kapital.kz.

Aivar Baikenov, Head of Research at Asyl-Invest, disagreed. He singled out the drop in the value of the Kazakh tenge, down 40% in a year, as a major problem.

“Kazakhstan is not attractive for foreign investors due to the devaluing tenge. I suppose Kcell could be interesting for local or maybe Russian investors,” he said.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Ukraine complains to Kazakhstan over map

SEPT. 25 2015, ALMATY (The Conway Bulletin) — Ukraine’s embassy in Astana sent an official protest note to the Kazakh foreign ministry after a school text book published a map of Russia showing the annexed region of Crimea to be firmly within its borders.

The map touched off a row that not only threatens to derail relations between Ukraine and Kazakhstan but also highlights the sensitive diplomatic tightrope that former Soviet states have to walk. Russia is the main economic driver of growth in Central Asia but Kazakhstan, and others, also need to maintain good relations with the West which firmly backs the Ukrainian government against the Kremlin.

“The Ukrainian Embassy has sent a note of protest to Kazakhstan’s foreign ministry because school books issued by the Mektep publishing house say the Autonomous Republic of Crimea is a federal subject of the Russian Federation,” Ukraine’s statement said.

“The distribution of this information contradicts the position of the international community and Kazakhstan that has repeatedly stated its support to Ukraine’s territorial integrity.”

Mektep is one of the biggest publishers of school textbooks in Kazakhstan. Its textbooks are used across the country and are based on the school curriculum.

The map, published in a geography textbook aimed at 16-year-olds earlier this year, showed Crimea as part of Russia.

Crimea quit Ukraine last year after a referendum overwhelmingly supported joining Russia. The referendum, though, has not been recognised by Kiev or its Western allies. Since then a civil war in the east of Ukraine has pushed relations between the West and Russia to a post-Cold War low.

Only a few countries, such as Syria, North Korea and Venezuela recognise Crimea as part of Russia. Kazakhstan, officially, has been careful not to recognise it as part of Russia.

When contacted by a Bulletin correspondent in Kazakhstan, the Mektep publishing house declined to comment. A couple of the book’s authors had previously spoken to RFE/RL, though.

They defended the map by saying that it wasn’t meant to be a political statement but instead to reflect the results of last year’s referendum.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Japan and Kazakhstan push on nuclear test ban

SEPT. 23 2015 (The Conway Bulletin) – Japan and Kazakhstan will co-chair a conference in New York later this month which will push for a comprehensive ban on nuclear testing, UN official Lassina Zerbo told Japan Times in an interview. Both countries have a vested interested in nuclear issues. The US dropped two atomic bombs on Japan in 1945 towards the end of World War 2. Kazakhstan sees itself as the champion of anti-nuclear issues.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Kazakh gas utility to issue bond

SEPT. 18 2015 (The Conway Bulletin) — KazTransGaz Aimak, a subsidiary of Kazakhstan’s state-owned gas transit system, said it plans to issue Eurobonds for 5b tenge ($18.6m) to refinance its outstanding debt. KazTransGas Aimak, which controls the gas distribution system in the Almaty region, has an outstanding bonds issue of 8.6b tenge ($31.9m) maturing in December 2018.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Kazakhstan’s Potash cuts assets

SEPT. 23 2015 (The Conway Bulletin) — Kazakhstan Potash Corporation, an Australia-listed mineral exploration company focused on Kazakhstan and Australia, said its assets had been overvalued by $302m in its half-year report. Mining companies operating in Central Asia have come under pressure to devalue their assets as local currencies have lost value.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)