Tag Archives: Kazakhstan

Kazakh Central Bank picks new interest rate

SEPT. 2 2015 (The Conway Bulletin) – Kazakhstan’s Central Bank picked the overnight repo rate as its benchmark interest rate and main tool for manipulating monetary policy, setting it at 12%.

The decision came two weeks after the Central Bank allowed the tenge to free float, abandoning the peg to the US dollar. The free-float pushed the value of the tenge down by 23%, the second devaluation in less than two years.

“This rate is aimed at directing nominal rates in the money market and will become a key instrument of the credit and monetary policy, in the new inflation-targeting regime,” the Central Bank said in a statement.

The tenge traded at around 240 to $1 immediately after the new interest rate was announced, having strengthened from 252 to $1 after the US dollar peg was ditched in August. By comparison, in February 2014, before the first devaluation, the tenge traded at 155 to $1.

Analysts welcomed the relatively high benchmark interest rate, saying that the tenge needed this level of support.

Sabit Khakimzhanov, head of research at Halyk Finance, said that the Central Bank may even need to increase this key interest rate by one percentage point to 13%.

“The interest rate in the money market is the only instrument left at the disposal of the NBK (National Bank of Kazakhstan) to manage inflation and the exchange rate,” he said.

“Only by keeping the rates credibly high, that is, at a level sufficiently high to enforce the necessary discipline and for a sufficiently long time. The interest rate corridor 12-14% meets these requirements.”

Other analysts said the high interest rate may encourage Kazakhs to keep their money in the bank.

“The high rate levels are clearly seen as securing the banking system from deposit outflows and anchoring inflation expectations,” Dmitry Polevoy, a Moscow-based economist at ING Groep NV, told Bloomberg News.

Previously the key interest rate had been the ineffective refinancing rate set at 5.5%.

Earlier this year the Kazakh government said that targeting inflation was going to be the main driver of its future economic policies.

The problem is that with the tenge devaluing and with oil prices remaining stubbornly low, the Kazakh government has already said that inflation is likely to climb above its 6-8% corridor target.

ENDS

(News report from Issue No. 246, published on Sept. 4 2015)

Kazakh Central bank unveils new rate

SEPT. 3 2015 (The Conway Bulletin) – Kazakhstan’s Central Bank said that it was introducing a new key interest rate that would be its main tool for manipulating monetary policy. It set the new refinancing rate at 12%.

ENDS

(News report from Issue No. 246, published on Sept. 4 2015)

Nostrum cuts offer for Kazakhstan-focused Tethys

AUG. 28 2015 (The Conway Bulletin) – London-listed Nostrum Oil & Gas reduced its offer price for Tethys Petroleum by a third to 0.147 Canadian dollars per share. Nostrum revised its offer after a new due diligence report. Both companies have their main operations in Kazakhstan’s oil sector. Tethys is also listed on the London Stock Exchange.

ENDS

(News report from Issue No. 246, published on Sept. 4 2015)

Labour unions in Kazakhstan criticise draft labour law

AUG. 28 2015 (The Conway Bulletin) – The Kazakh government has drawn up a draft bill which is says will do more to protect workers’ right although trade unions have said that it will reduce overtime pay and strain worker-company relations further.

The oil workers trade unions in western Kazakhstan have written to the government to ask it to change the draft labour law, setting up a stand-off between workers and the government.

Birjan Nurymbetov, the deputy minister for health and social development, told media that the new labour code was good for workers because it defended their rights and increased the criteria that an employer needs to test before he can sack an employee to 25 from 20.

“The new Labour Code fully protects the rights of employees against unfair dismissal,” he said.

The trade unions had a different view.

“The current project rate for overtime, holidays and weekends, is no less than 1-/12 to two times. This will be reduced to 1-1/4,” said Berdy Otebay, deputy head of the Aktau-based trade union Karazhanb- asmunaigas.

Relations between companies and workers have been strained since a protest in 2011 in the western oil town of Zhanaozen ended in clashes that killed at least 15 people. Companies have become increasingly wary of unions who have started to orgsanise workers more effectively, often securing pay rises.

ENDS

(News report from Issue No. 246, published on Sept. 4 2015)

Kazakhstan’s Kazkom posts $231m loss

AUG. 28 2015 (The Conway Bulletin) – Kazkommertsbank, one of the largest banks in Kazakhstan, posted a net loss of almost 55b tenge ($231m) in the first half of 2015, due to costs associated with bad loans inherited from the takeover of troubled BTA bank.

Kazkommertsbank had to sell assets to guarantee provisions for its non-performing loans (NPL) portfolio, which increased after the takeover of BTA earlier this year. Analysts said at the time of the merger that political, rather than business, reasons had driven the Kazkommertsbank’s takeover of BTA Bank.

The latest earnings results follow a 55% fall in net profit in 2014, a drop also associated with the takeover of BTA Bank. Sabina Amangeldi, senior analyst at Halyk Finance, said that the high non-performing loan (NPL) ratio in Kazkommertsbank’s portfolio would continue to weigh on its earnings potential.

“NPL share and cost of risk, remain high and earnings quality is still low,” she wrote in a note.

NPLs now account for 14.5% of Kazkommertsbank’s loan portfolio.

Ms Amangeldi also highlighted the weak tenge as a potential problem for Kazkommertsbank, an issue that the bank also pointed out.

Kazkommertsbank said the impact of the Central Bank’s decision at the end of last month to remove the tenge from its US dollar peg was still unclear.

“At the present time it is impossible to determine the impact of [the new monetary policy] on the Kazakhstan economy and the banking system,” it said.

The value of the tenge collapsed by 23% after the dollar peg was withdrawn in August, the second major devaluation in the value of the Kazakh currency since Feb. 2014.

ENDS

(News report from Issue No. 246, published on Sept. 4 2015)

China and Kazakhstan sign railway deals

SEPT. 1 2015 (The Conway Bulletin) – Askar Mamin, head of Kazakhstan Temir Zholy, the state-owned railway company, and Li Xueyong, the governor of the Jiangsu province in China’s far east, signed a series of documents that included an extra $600m investment in the development of the Khorgos special economic zone on the China-Kazakhstan border. Kazakhstan and China are spending billions on developing Khorgos, although a corruption scandal has slowed progress on the Kazakh side.

ENDS

(News report from Issue No. 246, published on Sept. 4 2015)

Petrol price controls cut in Kazakhstan

SEPT. 4 2015 (The Conway Bulletin) – The Kazakh government said that it was abandoning price controls on petrol. Heavy fluctuations in currency and oil prices have put these price controls under pressure.

ENDS

(News report from Issue No. 246, published on Sept. 4 2015)

Water tax to affect Kazakh soft drinks industry

AUG. 28 2015 (The Conway Bulletin) – The Kazakh State Revenue Committee plans to introduce a new tax on the use of underground water, a levy soft drinks manufacturers said will make production unprofitable. The new tax of 1,982 tenge ($8) per cubic metre of extracted water is a 200-fold increase on the previous tax, Aliya Mamytbayeva, director of the Association of Soft Drink Manufacturers, told vlast.kz.

ENDS

(News report from Issue No. 246, published on Sept. 4 2015)

Central Asian leaders head to Beijing

SEPT. 1/3 2015 (The Conway Bulletin) – Highlighting just how important China has become to Central Asia, four out of five of the region’s leaders travelled to Beijing to watch a military parade designed to mark the 70th anniversary of China’s victory over Japan in World War II.

Trips to Beijing have become a regular part of the diplomatic land- scape for the presidents of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. China now regards the region almost as its personal backyard, seemingly striking bilateral deals and agreements through the Shanghai Cooperation OrganisatPion (SCO) at will.

And this week appears to have been no different. Kazakh President Nursultan Nazarbayev flew to Beijing a few days early to sign off on a handful of deals. On his website, akorda.kz, Mr Nazarbayev said that the deals, spanning a range of sectors, had been worth $23b.

“We have actively cooperated with China for more than 20 years, mainly in the energy sector and in extracting other raw materials,” he said.

“Yesterday during our constructive talks with President Xi Jinping we agreed to create 45 joint facilities, and agreements were signed on 25 of them worth a total of $23b.”

The details of these deals were vague but they covered a range of sectors from tourism to hydropower.

Mr Nazarbayev also congratulated Chinese President Xi on winning the 2022 Winter Olympic Games for Beijing in July ahead of Almaty.

Following on a few days behind him were the presidents of Kyrgyzstan, Tajikistan and Uzbekistan. Only Kurbanguly Berdymukhamedov, Turkmenistan’s president, was missing. Also present were other leaders from neighbouring countries including Russia’s Vladimir Putin and South Korea’s Park Geun-hye.

With an economic downturn linked to Russia and a collapse in the price of oil, China has become an even more important driver of economic development in Central Asia and the SouthCaucasus.

At the end of last month, Kyrgyzstan officially opened a new power line funded by China that will improve electricity transit from the south of the country, where its hydro- power stations are sited, to the north and when Uzbekistan’s president Islam Karimov flew into Beijing its official media said bilateral trade had tripled in six years to around $5b.

ENDS

(News report from Issue No. 246, published on Sept. 4 2015)

Kazakh football team qualifies for UEFA Champions League

AUG. 26 2015 (The Conway Bulletin) – FC Astana became the first Kazakh football team to qualify for the group stages of the UEFA Champions League by beating the more fancied Apoel Nicosia 2-1 on aggregate during a two-leg qualifying match. FC Astana scored with 6 minutes remaining of normal time in the second match in Nicosia.

ENDS

(News report from Issue No. 245, published on Aug. 28 2015)