On the back of its high-growth oil economy, Kazakhstan sees itself as well-positioned to fill a financial void in the trading of shares in small and medium-sized firms in the region.
"Between Russia and China I see an empty place on the financial map," said Arken Arystanov, chairman of the Regional Financial Centre of Almaty (RFCA), a Kazakhstani government agency. The agency will spend $4-5 million to purchase a 25 percent stake in the Kazakhstan Stock Exchange (KASE), he said.
The KASE has a market capitalisation of roughly $50 billion in stock and bond listings, Arystanov said in an interview. "We want to increase that by three times in three years," he said, adding that he hopes to be an example for other countries in the region. "It will happen in the first half of 2007."
"The goal of the RFCA is to be a locomotive for development" said Arystanov. "We want to draw in Ukrainian, Central Asian, Russian and Chinese companies and give them a new place to play the game."
Arystanov was in London as part of a larger Kazakh delegation, headed by President Nursultan Nazarbayev, to cultivate investor appetites in the Central Asian nation.
Nazarbayev, in power in the former Soviet republic between China and Caspian Sea since 1989, has attracted billions of dollars in Western investment into the oil sector and introduced market reforms that have helped fuel rapid economic growth.
At the same time he has resisted political change, ruling over a state where power is concentrated in his hands. Parliament contains only one member who is mildly critical of him, and elections have never been judged free and fair by international observers.
Still, in the 2006-07 World Economic Forum list, Kazakhstan was rated as the 56th most competitive country in the world, the highest of any former Soviet republic and just two down from China.
Already fourteen Kazakh companies have listed IPO's with the London Stock Exchange, four on the main market and 10 on the Alternative Investment Market (AIM), raising a combined $4 billion.
Among those listed are Kazakhmys, a mining concern based in southern Kyzyl Orda province. It raised $1.2 billion in October 2005 and put the company into the FTSE 100 stock index.
Arystanov said the expected IPO from Kazakhstan's third-largest bank, Halyk, is due in early 2007. No 2 Kazkh bank TuranAlem has said it wants to list shares by 2009.
On Tuesday, Arystanov will sign a regional co-operation agreement with the LSE that will facilitate the sharing of information with the RFCA and meetings with British and Kazakh executives. Arystanov has enlisted former World Bank director James Wolfensohn to assist with the development of the RFCA.
Additionally, Kazakhstan plans to raise approximately $2 billion to help pay for a major new highway running through the country to connect European Russia with China. Askar Sembin, president of the Development Bank of Kazakhstan, said he was in talks with among others Citigroup and HSBC as well as the World Bank, European Bank For Reconstruction and Development, the Asian Development Bank and Islamic Development Bank to raise the funds.
The type of financing however is still to be discussed, Sembin told Reuters. Sembin said a separate railroad to run parallel to the highway would cost an additional $500 million while developing transit hubs will cost another $200-300 million. He said the government did not want to fund the developments out of the budget, even thought the country is awash with oil wealth.
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