Tag Archives: Kazakhstan

Currencies: Kazakh tenge

FEB. 3 2017 (The Conway Bulletin) — The Kazakh tenge moved to $325.5/$1, its highest value against the US dollar since December 2015. The main drivers of this strengthened currency are oil prices and a more consistent and credible economic policy coming out of the Central Bank.

In January last year, the tenge bottomed-out at 381/$1. This was when oil prices were hovering at under $30/barrel, after Iran said it would start exporting oil as soon as US-lead sanctions were lifted, and confidence in Kazakhstan’s economic policies were at an all- time low after a bungled defence and then a sudden devaluation of the tenge.

Now oil prices are back up around $55 and Daniyar Akishev is heading the Central Bank. He took over from the hapless, indecisive

Kairat Kelimbetov in November 2015. It hasn’t been all easy for Akishev, but things are definitely looking up now. This year alone, the Kazakh tenge has outperformed its regional peers and risen by 3%.

ENDS

(News report from Issue No. 315, published on Feb. 3 2017)

Korea’s Kookmin Bank says will sell stake in Kazakhstan’s CenterCredit

ALMATY, FEB. 1 2017 (The Conway Bulletin) — After days of rumours, South Korea’s Kookmin Bank confirmed that it would sell its 41.93% stake in Kazakhstan’s CenterCredit Bank to a Kazakh consortium.

The sale will both end an unhappy time in the Kazakh finance sector for Kookmin Bank and also highlight the worsening weaknesses in the Kazakh system.

CenterCredit is Kazakhstan’s fourth largest bank by assets. The consortium buying Kookmin’s share is lead by Tsenabank, which is the third largest bank in Kazakhstan.

“On the basis of preliminary agreements, the Consortium has completed talks with Kookmin on the final conditions for the Consortium to purchase the stake by the now owned by Kookmin Bank,” Tsenabank said in a statement.

It also said that CenterCredit’s chairman, Bakhytbek Baiseitov, would by the 10% stake in the bank now owned by the International Finance Group, part of the World Bank.

Mr Baiseitov is one of the wealthiest men in Kazakhstan. He set up CenterCredit Bank in the late 1980s and made the original deal to sell a 30% stake in it to Kookmin Bank in 2008 for $500m. Kookmin Bankhave had to write down the value of their stake in CenterCredit Bank constantly and it has become to be viewed as one of their worst ever deals. Shortly after buying their first stake in the bank, the Global Financial Crisis hit the Kazakh finance sector, swamping it with bad debt, forcing the government to bail out a handful of banks.

And Kazakhstan’s banking sector has been hit again by a collapse in the value of the tenge, low oil prices and a recession in Russia. The proportion of non-performing loans has risen.

Last year, the ratings agency Fitch said CenterCredit Bank’s ratings were constrained by “high problem loans, low core capital ratios, and modest core profitability.” It said the proportion of bad loans in its portfolio was around 16%. This was one of the highest, with Tsenabank having a bad debt ratio of around 5%.

ENDS

(News report from Issue No. 315, published on Feb. 3 2017)

Kazkom and Halyk Bank agree merger

Gazprom to buy Kazakh gas

JAN. 24 2017 (The Conway Bulletin) — Russia’s Gazprom will buy 12.8b cubic metres of gas from Kazakhstan in 2017 continuing its strategy of preferring Kazakh gas suppliers over other regional companies. Kazmunaigas has boosted its cooperation with Gazprom over the past few years while other state companies linked to Turkmenistan and Uzbekistan have lost ground.

ENDS

(News report from Issue No. 314, published on Jan. 27 2017)

Dutch chip maker to set up plant in Kazakhstan

JAN. 25 2017 (The Conway Bulletin) — Dutch potato chip manufacturer Farm Frites is considering setting up a plant in northeast Kazakhstan, Kazakh deputy PM Askar Myrzakhmetov, Kazakh deputy PM and agriculture, said. Farm Frites supplies frozen potato chips to restaurants. A deal with Koktem Agricultural services, the company it is negotiating with, would give the Kazakh government a boost as it has said it wants to diversify away from oil and gas.

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(News report from Issue No. 314, published on Jan. 27 2017)f

Halyk Bank starts talk with Kazkommertsbank

JAN. 20 2017 (The Conway Bulletin) — Ending weeks of speculation, Halyk Bank, owned by the son-in-law and daughter of Kazakh President Nursultan Nazarbayev, said that it had started talks with Kazkommertsbank, the country’s biggest bank, on merging. A potential merger between the two banks would create a company that would dominate the Kazakh banking sector with a market share of around 40%. Unnamed sources in November 2016 had told Reuters that a merger between the two banks was being discussed in secret.

ENDS

(News report from Issue No. 314, published on Jan. 27 2017)

Kazakh authorities arrest union leaders

JAN. 26 2017 (The Conway Bulletin) — The New York-based Human Rights Watch criticised the Kazakh authorities for arresting two union leaders on Jan. 20 for allegedly organising a hunger strike by oil workers earlier in the year against the closure of a union confederation structure. The two union leaders, Amin Yeleusinov, and Nurbek Kushakbayev, have been placed in pretrial detention. The Kazakh government wants to reduce the power of the unions, who they blame for a series of strikes since 2011.

ENDS

(News report from Issue No. 314, published on Jan. 27 2017)

S. Korea to sell its bank in Kazakhstan

JAN. 22 2017 (The Conway Bulletin) — South Korea’s Kookmin Bank is likely to sell its 41.9% stake in Kazakhstan’s Bank CenterCredit because of mounting losses, Korean newspapers reported, a blow to the reputation of the Kazakh banking sector. Kookmin Bank bought its stake in Bank CenterCredit in 2008 for 940b won ($800m) but it has written down the value of the stake several times since then to virtually zero. Kazakh banks have been under mounting pressure over links to bad debt that have built up over the past couple of years as its oil-backed economy has weakened. Bank CenterCredit has been especially vulnerable because of its exposure to the mortgage sector which soured after a 50% devaluation of the tenge in 2015. Bank CenterCredit has not confirmed the reports.

ENDS

(News report from Issue No. 314, published on Jan. 27 2017)

Revenues at Kazakh mobile operator collapse as mobile users feel economic chill

ALMATY, JAN. 27 2017 (The Conway Bulletin) — Kcell, Kazakhstan’s biggest mobile operator, felt the full force of the regional economic slowdown in 2016 with revenues falling 12.7% to 147b tenge ($444m), its lowest since 2009.

Kcell’s annual reports are important because they provide one of the few open and accurate insights into how Kazakh companies are handling a sharp economic slowdown triggered by falling oil prices and a recession in Russia.

The company, which is part- owned by the Kazakh government and part-owned by Sweden’s Telia, also said that a drop in profit margin had reduced its overall profit by 41% to just over 31b tenge ($94.5m).

In a statement, Kcell CEO, Arti Ots, admitted that 2016 had been tough.

“2016 was extremely challenging for Kcell, although at the end of the year we saw early signs of market stabilisation,” he said.

“As we move into 2017, there are positive signs of economic recovery in Kazakhstan, with an easing in consumer price inflation and indications of growth in the economy.”

A collapse in the value of the tenge, economic stagnation, job losses and a fall in vital remittance values all hit the Kazakh economy in 2016.

The specific improvements that Mr Ots referenced include a boost to revenues from demand for contract phones which has fed through into a third consecutive quarter of revenue increase.

“We are now seeing a positive interconnect balance with revenue exceeding costs and we expect this situation to continue in 2017,” he said.

The details of Kcell’s financial results also reflect the turbulence of the Kazakh economy, including rising inflation. Kcell said that costs had risen by 19.2% in 2016 to nearly 11b tenge ($33.5m). A spokesperson for the company said that some of this cost increase was triggered by a rise in staffing costs at new outlets.

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(News report from Issue No. 314, published on Jan. 27 2017)

Kazakh capital hosts Syrian peace talks

JAN. 24 2017 (The Conway Bulletin) — Talks in Astana between the forces of Syrian president Bashar al-Assad and rebels broke up after two days with both sides promising to consolidate a ceasefire. The deal, overseen by Turkey, Russia and Iran, will be seen as a diplomatic success for Kazakhstan which hosted the talks. Kazakh president Nursultan Nazarbayev wants to build up a reputation for Kazakhstan as an agent for peace.

ENDS

(News report from Issue No. 314, published on Jan. 27 2017)