Tag Archives: Kazakhstan

Kazakhstan’s C. Bank bets against sterling

JULY 8 2016 (The Conway Bulletin) — Kazakhstan’s Central Bank chief Daniyar Akishev said he bet against the sterling ahead of Britain’s referendum to leave the EU, commonly known as Brexit. As he expected market volatility in the aftermath of the vote, Mr Akishev said the Central Bank opened a long position to sell off part of its sterling holdings, effectively gaining from the post-Brexit plunge of the British currency against the US dollar.

ENDS

(News report from Issue No. 289, published on July 15 2016)

HM to open store in Kazakhstan

JULY 13 2016 (The Conway Bulletin) — Swedish fashion retailer H&M said it will open its first store in Kazakhstan in 2017, expanding its market into Central Asia. H&M follows other chains, such as French retailer Carrefour and food chain McDonald’s, which entered the Kazakh market in the past few months. Kazakh media said that the location for H&M’s new store is likely to be Almaty, Kazakhstan’s largest city.

ENDS

(News report from Issue No. 289, published on July 15 2016)

Boardroom battle for control of Kazakhstan’s KMG EP heats up

ALMATY, JULY 14 2016 (The Conway Bulletin) — Intensifying its fight for more control over its London-traded subsidiary KMG EP, Kazakhstan’s state-owned energy company Kazmunaigas increased by 14% its earlier buyout offer to minority shareholders and retracted demands to cut the company’s independence.

Under pressure to boost income from oil and gas sales, Kazmunaigas wants to increase its 58% stake in KMG EP. KMG EP’s assets are more profitable than the assets owned by Kazmunaigas.

The problem for Kazmunaigas, though, is that its initial buyout offer of $7.88/GDR met with strong resistance from independent shareholders at KMG EP last month. The increase to $9/GDR, which Kazmunaigas issued without an explicit explanation, also appeared to attract a withering response.

“An increase in the price of the Purchase Offer would not be consistent with the prior statements made by Kazmunaigas that it ‘is not seeking to acquire any significant additional holdings in KMG EP through this offer’,” the independent directors said in a note.

They accused Kazmunaigas of underhand tactics to try to force more control over KMG EP. Specifically, the minority shareholders rallied against a new corporate governance structure proposed by Kazmunaigas that would reduce independent control of KMG EP. Kazmunaigas wanted to impose a veto against the appointment of independent directors but has now dropped these demands.

The ongoing saga within the most powerful industrial structure in Kazakhstan acts as a rare window on Kazakhstan’s corporate governance culture after a series of high profile scandals ahead of planned new IPOs, including Kazakhtelecom, the state- owned telecoms company.

KMG EP’s GDRs have traded at between $6 to $9 in the past 12 months.

ENDS

(News report from Issue No. 289, published on July 15 2016)

Kazakhstan to solve trade row with Ukraine

JULY 8 2016 (The Conway Bulletin) — Asset Asavbayev, director of transport at Kazakhstan’s ministry of industrial development, said Kazakhstan will step in to resolve a row between Russia and Ukraine that has stalled Ukrainian cargo in transit to Central Asia via Russian territory. On July 1, Russian border police enforced a transit ban for Ukrainian goods, citing a Eurasian Economic Union regulation.

ENDS

(News report from Issue No. 289, published on July 15 2016)

Kazakh court jails IS group

JULY 12 2016 (The Conway Bulletin) — A court in Aktobe, northern Kazakhstan, sentenced 12 people who had allegedly tried to join the ranks of the extremist IS group in February. The suspects received sentences of between 6 and 8 years in prison. The court said the group had tried to travel to Syria to join an IS training camp. Kazakhstan’s government has repeatedly emphasised its efforts towards combating Islamic extremism.

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(News report from Issue No. 289, published on July 15 2016)

Azerbaijani, Kazakh and Uzbek ministers meet in Astana

JULY 12 2016 (The Conway Bulletin) — With the exception of Turkmenistan, foreign ministers of the Caspian Sea littoral states met in Astana to continue drafting a resolution which should resolve ongoing disputes over the legal status of the Caspian. Kazakh PM Karim Massimov also attended. The ministers said the convention will be signed at a heads of state meeting next year in Astana.

ENDS

(News report from Issue No. 289, published on July 15 2016)

Kazakh bank still suffers from Global Financial Crisis

JULY 8 2016 (The Conway Bulletin) — Kazakhstan’s Halyk Bank is still suffering from the impact of the 2008 Global Financial Crisis, ratings agency Standard & Poor’s said as it downgraded the bank’s outlook because it had not been able to reduce the proportion of toxic assets in its loan portfolio. In the first six months of 2016, overdue loans grew to 11.7% of the bank’s total portfolio, up from 9.2% at the end of 2015. Halyk Bank is the second-largest bank in Kazakhstan. President Nursultan Nazarbayev’s daughter Dinara and her husband Timur Kulibayev own Halyk Bank.

ENDS

(News report from Issue No. 289, published on July 15 2016)

Kazakh CB approves RBS sale

JULY 4 2016 (The Conway Bulletin) — Kazakhstan’s Central Bank approved the sale of the local subsidiary of Britain’s Royal Bank of Scotland to Russian lender Expobank, owned by Igor Kim. The deal had been announced in June. Earlier this year, Mr Kim bought RBS’s Russian subsidiary. The sale of RBS is considered important for Kazakhstan’s ailing banking sector.

ENDS

(News report from Issue No. 288, published on July 8 2016)

Kazakh police reports suicide case

JULY 5 2016 (The Conway Bulletin) — Kazakh police reported thatTair Kaldybayev, found guilty of defamation by a court in Almaty in May, committed suicide in his prison cell. Kaldybayev, a businessman, was accused of having funded a smear campaign against Kazkommertsbank in 2014, which appeared on the Nakanune.kz website. The website director, journalist Guzyal Baidalinova was sentenced for libel.

ENDS

(News report from Issue No. 288, published on July 8 2016)

Business comment: Contracts of the century

JULY 8 2016 (The Conway Bulletin) — After the fall of the Soviet Union, multinational oil companies flocked into Central Asia and the South Caucasus to strike new deals around the Caspian Sea.

Kazakhstan in 1993 and Azerbaijan in 1994 awarded two massive licenses to Chevron and BP respectively. Both contracts became known as “the contract of the century”.

They became the largest oil projects in Azerbaijan and Kazakhstan, both operated under Production Sharing Agreement schemes, which gave significant advantages to the multinational companies in recovering their initial capital expenditures.

In the new era of sustained low oil prices, however, the Azeri-Chirag-Guneshli (ACG) group of offshore oil fields in Azerbaijan has had a different fate from Tengizchevroil in west Kazakhstan.

Azerbaijan’s President Ilham Aliyev has repeatedly pushed BP and its partners to increase production and continue to invest in spite of lower returns. Since mid-2014, when oil prices started plunging, ACG’s output growth has been sluggish at best. Now a potential corporate war over ACG between BP and Exxon contrasts strikingly to the success story of Tengizchevroil.

After years of mulling over an expansion and balancing costs, the consortium decided to launch a $36.8b investment that will boost production by 2022. This is a relief for Kazakhstan.

Tengiz has one of the lowest production costs in the region, at around $5.3/barrel, which makes it an easy bet even when oil prices are so low.

After the hype of the 1990s, now it seems clearer which of the two really deserved to be called the “contract of the century”.

ENDS

(News report from Issue No. 288, published on July 8 2016)