JUNE 8 2017 (The Bulletin) — Railway container services linking China with Iran via Kazakhstan and Turkmenistan are due to begin this month after the sides agreed various deals in May, the Railway Gazette reported. It said that the 10,300km journey would take around 14 days rather than 40 days by sea.
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(News report from Issue No. 332, published on June 12 2017)
JUNE 8 2017 (The Bulletin) — Shanghai’s Stock Exchange said that it had agreed a deal to buy 25.1% of Astana’s planned new bourse. The Astana Stock Exchange is planned to open by the end of the year as the centrepiece of a new Astana International Financial Centre. It wants to attract foreign companies and has already said that its national companies — Air Astana, Kazmunaigas and Kazatompom — will list part of their companies on the Astana Stock Exchange.
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(News report from Issue No. 332, published on June 12 2017)
JUNE 8 2017 (The Bulletin) — The fifth round of Astana peace talks focused on the war in Syria have been postponed. The Kazakh foreign ministry, as hosts, made the announcement although it didn’t say when the talks would resume. Kazakhstan has been hosting Syria peace talks all year and the fifth round was scheduled for June 12/13.
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(News report from Issue No. 332, published on June 12 2017)
JUNE 7 2017 (The Bulletin) — A court in Kazakhstan sentenced fugitive former banker-turned- opposition-leader Mukhtar Ablyazov to 20 years in prison for various financial crimes. Ablyazov is currently living in France where a judge ruled that he couldn’t be extradited to Russia or Ukraine because there was a risk that he would then be sent to Kazakhstan and tortured. Kazakhstan has said that Ablyazov plotted to overthrow Kazakh President Nursultan Nazarbayev after he fled the country with billions of dollars he stole from BTA Bank, where he had been chairman.
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(News report from Issue No. 332, published on June 12 2017)
JUNE 12 2017 (The Bulletin) — The Kyrgyz som dropped another 0.3% over the week, adding to a general downward trend since the end of April when it briefly threatened to break through the lower 67/$1 barrier.
On April 27, the Kyrgyz som hit 67.13/$1, a level not seen since the currency devaluation of 2015/16. Since then the som has fallen back to a level that analysts have said is a more natural range of between 68 and 69 per $1. It is now trading at 1.25% higher than at the start of the year.
Elsewhere, the Uzbek soum continued its slow downward trajectory and the Kazakh tenge moved closer to falling through the 316/$1 barrier, a level not seen since the beginning of May. It has generally tracked down with oil.
JUNE 12 2017 (The Bulletin) — Shares in Central Asia Metals (CAM), the Kazakhstan focused miner, stayed steady this week on the London Stock Exchange despite some early calls by stock analysts to buy into it.
At the end of the week it was trading at 220p, roughly the level it has been anchored to since the start of May.
Still, some analysts said that now was a good time to buy into CAM. Peel Hunt has a target price of 290p against CAM, up from 270p. Canaccord Genuity also gives the stock a buy rating.
Across the Caspian Sea, Bank of Georgia, has also been given a lift by analysts. Investec raised its target price for Bank of Georgia to 4,000p from 3,950p. Several other brokerages moved their guidance to a ‘buy’ rating too.
Last month it issued the first ever corporate debt in Georgian lari, attracting widespread publicity. The IFC, part of the World Bank, said that it would step into support the lari issues, agreeing to buy up to a third of the $250m bond sale. Reports said that 20 other institutional investors had applied to buy a total of $207m of the bond, meaning the the IFC ended up with a smaller stake than it had offered.
Kaha Kiknavelidze, Bank of Georgia CEO, said: “IFC’s bid gave us great support in building investor confidence and creating early momentum in book build.”
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(News report from Issue No. 332, published on June 12 2017)
ALMATY, JUNE 9 2017 (The Bulletin) — India and Pakistan joined the Russia and China led Shanghai Cooperation Organisation (SCO), pushing the military-economic group beyond Central Asia for the first time.
The SCO, set up in 2001 after Uzbekistan joined what had been called the Shanghai Five, now covers 3.1b people — nearly half the world’s population.
For Central Asia, the geographic focus of the SCO, the ascension of India and Pakistan confirms it as a fulcrum of world diplomacy and also pulls South Asia tighter into its economic sphere.
After its annual 2-day summit meeting in Astana, the SCO said: “The heads of state highlighted the historical significance of the SCO’s enlargement. They believe that granting full SCO membership to India and Pakistan at the current meeting of the SCO Heads of State Council will facilitate the further development and enhance the potential of the SCO.”
The success of the SCO has crept up on Western governments. It has largely been built on China’s drive into Central Asia.
Russia, through its Soviet legacy, has more access points into Central Asia than China and has largely used the SCO as a meeting place and for developing military ties. China, though, has used the SCO to dispense everything from cheap credit to infrastructure deals and military know- how and sees it as a vital cog in its ‘One Belt. One Road’ strategy focused on developing trade corridors to Europe.
Sheng Shiliang, a researcher at the Xinhua Center for World Affairs Studies, told Chinese media that SCO expansion was important to China.
“The SCO has never been just a security group from the beginning. The Belt and Road Initiative offers a timely and convenient framework for the SCO members to facilitate connectivity and ultimately, achieve free flows of goods, capital, service and technology,” he said.
For India and Pakistan, joining the SCO will increase their presence in Central Asia. Over the past five years, India has been trying to catch up with China’s progress in the region. It wants to develop markets and buy up energy projects.
Pakistan has developed links mainly through the TAPI gas pipeline, which will run from Turkmenistan and also through the CASA-1000 electricity scheme which will send power generated by hydropower stations in Tajikistan and Kyrgyzstan.
The only country in Central Asia that is not a member of the SCO is Turkmenistan, which has traditionally taken a more isolationist neutral stance to international organisations.
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(News report from Issue No. 332, published on June 12 2017)
JUNE 7 2017 (The Bulletin) — UN Secretary-General Antonio Guterres started a tour of Central Asia by flying into Kazakhstan. He was due to attend a meeting of the Shanghai Cooperation Organsiation (SCO) in Astana before flying to Uzbekistan and Kyrgyzstan, Tajikistan and Turkmenistan. This is the first visit by a UN Secretary General to Central Asia since 2015.
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(News report from Issue No. 332, published on June 12 2017)
JUNE 8 2017 (The Bulletin) — Light CPC crude oil is being sold at an increasingly heavy discount because the Kashagan project needs to increase output despite low oil prices, various traders told Reuters. In the article, the traders said that it was simply cheaper for Kazakhstan to discount CPC crude than cut back on Kashagan output which only came onstream last year after a series of setbacks. Traders said that CPC crude, considered high quality, had been sold at a premium of $0.15/barrel in 2013. In the 2014-16 downturn this dropped to a discount of $0.11-$0.18 but was now being sold at a discount of $1.23 because of the oversupply.
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(News report from Issue No. 332, published on June 12 2017)
ALMATY, JUNE 8 2017 (The Bulletin) — Chinese Citic Bank Corp completed the purchase of a 60% stake in Altyn Bank from Halyk Bank for an undisclosed amount, marking China’s first investment in the Kazakh banking sector.
The deal also lays down yet another marker of intent by China over its push to develop Central Asia, and in particular Kazakhstan, as the fulcrum of its ‘One Belt. One Road’ development policy. It envisions a new Silk Road, connecting China and Europe, which means developing infrastructure in Kazakhstan.
This is also China’s first bank deal in Kazakhstan and comes in the midst of a lack of confidence in the Kazakh banking sector, linked to a three year-long economic downturn. China’s CITIC bank has not commented but Umut Shayakhmetova, the Altyn Bank CEO, did.
“Within the ‘One Belt. One Road’ Chinese initiative we are seeing Kazakh companies expressing a clear desire to develop their business in China as we continue to follow the needs of our clients,” she said.
The deal was announced last year.
Altyn Bank is described as a medium-sized lender with assets of $930m. Halyk Bank said it would retain a 40% stake in the bank. Altyn Bank was formed in 2014 when Halyk bought HSBC Kazakhstan.
China’s ‘One Belt. One Road’ policy has lead to a rush of Chinese deals in Kazakhstan. COSCO Shipping Corporation and Jiangsu Lianyungang Port Co bought a 49% stake in the Khorgos dry port on the Kazakh-Chinese border last month and this month the Shanghai Stock Exchange said it would buy a 25.1% stake in the Astana Stock Exchange.
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(News report from Issue No. 332, published on June 12 2017)