Transcript KASE Standard Presentation dated September 1, 2007

INTRODUCING KAZAKHSTAN
STOCK EXCHANGE INC. (KASE)
Relevant as of September 1, 2007
COEVAL OF TENGE …
KASE was established at November 17, 1993 under the name
of Kazakh Interbank Currency Exchange, two days after the launching of
tenge – new legal tender of Kazakhstan.
Now, that day (November 15) is celebrated as the official annual holiday
"The Day of Financiers".
"Old" tenge
(1993–2006)
"New" tenge
(since 2006)
YOUNG AND SINGLE …
KASE – non-commercial joint-stock company with the 59
shareholders – National Bank of Kazakhstan (the largest
shareholder), banks, brokerage firms, asset management
companies, pension funds and other professional financial
institutions.
All of them have only one vote each*.
* Item to discuss.
YOUNG AND SINGLE … (2)
Today and finally KASE is the single universal financial exchange
in Kazakhstan with the brief but bright history:
1993 – first trades with the foreign currency (US dollars)
1995 – first trades with the T-bills
1996 – first trades with the derivatives (KZT/USD exchange rate futures)
1997 – first trades with the listed equities
1997 – first trades with the government stacks of shares
1997 – first trades with the non-listed corporate securities
1998 – launching of the OTC securities market within KASE
YOUNG AND SINGLE … (3)
1998 – first trades with the eurobonds of Kazakhstan
1999 – first trades with the listed corporate bonds
1999 – first trades with the municipal bonds
(since 2005 the issuance of these bonds is prohibited)
1999 – launching of the direct repo market
2001 – first trades with the supranational (IFO) bonds
2001 – launching of the automatic repo market
(the most massive and active sector of the KASE market)
2002 – first trades with the promissory notes
YOUNG AND SINGLE … (4)
2003 – first trades with foreign T-bills (Russia 2028 & Russia 2030 )
2006 – first trades with foreign corporate bonds (JP Morgan and Merrill
Lynch)
2006 – IPO of KazMunayGas Exploration–Production shares with
the use of KASE settlement system
2006 – secondary distribution of KAZAKHMYS PLC (UK) shares
with the use of KASE settlement system
IMPRESSIVE DYNAMICS …
250
Other
Repo
200
150
Corporate securities
169.3
Public securities
USD bln
Derivatives
Currencies
100
50
0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
IMPRESSIVE DYNAMICS … (2)
250
250
220.5%
200
200
150
150
KASE, USD bln
% to GDP
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
0
1997
0
1996
50
1995
50
1994
100
1993
100
GDP, USD bln
UNIVERSAL EXCHANGE …
STF RFCA,
386.6 USD mil (0.2%)
Currencies,
59,215.4 USD mil
28,2%
205,092.1
51,5%
USD mil
3,6%
3,0%
Autorepo with public
securities,
108,253.8 USD mil
4,8%
8,2%
Direct repo with public securities,
1,057.4 USD mil (0.5%)
Corporate securities,
7,629.2 USD mil
Public securities,
6,392.7 USD mil
Direct repo with corporate
securities, 10,070.6 USD mil
Autorepo with corporate
securities, 17,237.5 USD mil
In total, repo (money) market takes 65.1% of general KASE turnover
UNIVERSAL EXCHANGE … (2)
KASE serves the markets of:
 direct and automatic repo with public and corporate securities
 foreign currencies (US dollar, euro, russian rouble)
 public securities of Kazakhstan issued by the National Bank,
municipalities and Ministry of Finance (including international
bonds of Kazakhstan)
 supranational bonds and foreign T-bills
 promissory notes
 equities
 corporate bonds …
VARIETY OF CORPORATE BONDS
 "regular" domestic bonds (nominated in tenge or foreign
currencies, with discount or coupon, with fixed or floating
coupon)
 international bonds of Kazakhstan issuers
 agency bonds (with the tax regime equal to the tax regime of
T-bills)
 infrastructural bonds (secured by the government guarantee)
 bonds of foreign issuers (previously registered outside
Kazakhstan)
 soon: bonds of foreign issuers (registered in Kazakhstan)
DOMINATION OF REPO AND FOREX MARKETS
KASE repo market is specially designed for domestic purposes –
to satisfy the needs of local pension funds and banks in shortterm money borrowings and lendings.
KASE foreign currencies market – the basic trading site for the
National Bank of Kazakhstan to regulate the exchange rate of
tenge.
KZT/USD: the KASE exchange rate today = official exchange rate
tomorrow.
LISTED COMPANIES (by categories)
Equities
Corporate bonds
31
Category "A"
Category "B"
31
Category "A"
Category "B"
32
27
62
61
20
7
9
13
9
8
8
1999
2000
2001
13
12
2002
20
27
30
38
34
39
30
1
2003
2004
2005
2006
2007
1999
10 20
1 2
2000
2001
6
2002
11
2003
39
49
6
7
2004
2005
17
2006
24
2007
LISTED COMPANIES (in total)
TOTAL
Equities
Corporate bonds
70
68
62
54
84
40
78
17
17
21
25
45
45
114 120
56
68
36
49
22
1
11
1999
2000
17
2001
2002
79
94
2003
2004
2005
2006
2007
1999
23
32
2000 2001
2002
2003 2004
2005 2006
2007
MARKET CAPITALIZATION (USD bln)
16
70
Shares
Corporate bonds
14
60
12
50
10
40
8
30
6
20
4
10
2
0
0
2001
2002
2003
2004
2005
2006
2007
2001
2002
2003
2004
2005
2006
2007
LISTED COMPANIES (by structure)
Equities
Corporate bonds
100%
90%
Energy/power
engineering
Finance
70%
Telecommunication
services
Raw materials sector
60%
Industry
50%
Main consumer sector
80%
40%
Public sector
30%
Information technology
20%
Health protection
10%
0%
2000 2001 2002 2003 2004 2005 2006 2007
2000 2001 2002 2003 2004 2005 2006 2007
Discretionary consumer
sector
"PURE" CORPORATE SECURITIES MARKET
8,0
7,0
6,0
5,0
Turnover, USD bln
9,0
4,0
3,0
Equities
2,0
Corporate bonds
1,0
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Total KASE turnover for 8 months of 2007 with the equities – 5,384.9 USD mil,
with the corporate bonds – 2,630.9 USD mil.
"PURE" CORPORATE SECURITIES MARKET (2)
140
120
100
80
Daily turnover, USD mil
160
Equities
Corporate bonds
60
40
20
0
2000
2001
2002
2003
2004
2005
2006
2007
In 2007 average daily KASE turnover with the equities – 32.2 USD mil,
with the corporate bonds – 15.1 USD mil.
"PURE" CORPORATE SECURITIES MARKET (3)
The main problems are:
• lack of free-float equities (the heritage of case-by-case
privatization)
• conservative policy of main domestic investors ("buy bonds
and hold till maturity")
Nevertheless ..
CHAMPION GROWTH (in 2005–2007)
3500
KASE_Shares
3000
2,808
2,876
(12.02.07)
(17.07.07)
2,394
(19.04.06)
2500
2,387
(20.08.07)
2000
1500
1000
216
(05.01.05)
500
01.07.07
01.04.07
01.01.07
01.10.06
01.07.06
01.04.06
01.01.06
01.10.05
01.07.05
01.04.05
01.01.05
0
Index KASE_Shares demonstrated the rapid growth: 11.1 times (for the period Jan.05, 2005
– Apr.19, 2006) and 1.2 times (for the period Apr.19, 2006 – Feb.12, 2007), due to the
appearance of new investors’ class – mutual funds and individual persons.
INVESTOR BASE …
180
120
160
Unit investment funds assets
140
Insurance assets
120
Pension assets
100
Banks assets
80
60
Total assets, % to GDP
GDP
100
80
60
40
40
20
20
0
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Institutional investors assets
at the end of 2006 reached
78.5 bln USD, 89.0% of
them are banks assets,
9.1% – pension assets
Principal indicator is growth
of unit investment funds
assets (at the end of 2006 –
383 mln USD)
INVESTOR BASE (2)
12
Consequences of excess
investor base is the real
“zero" yield of debt
instruments for investors
10
8
6
4
Inflation
2
Yield of "domestic" listing bonds
of "А" category
0
2000
2001
2002
2003
2004
2005
2006
ADVANCED TECHNOLOGIES
KASE uses it’s own trading platform:
 on-screen based electronic "Server – Client" system
 remote access
 electronic signature and electronic documents circulation
 traffic encryption
 on-line data saving
Central Depository is the KASE subsidiary:
 DVP
 T+0 settlement basis
IN THE FUTURE …
• Waiting for the IPO of the largest Kazakhstan banks and
producers (according to the Securities Law, at least 20% of the local shares being
placed must be suggested at the domestic market for purchase)
• Administrating the Special trading site of the Almaty Regional
Financial Center (set-up to attract foreign issuers and investors)
• Welcoming the new listing companies
• Waiting for the IFOs to place their bonds in Kazakhstan
• Ready to introduce T+n settlement basis for the foreign
operators (only for eqities)
CONTACT US …
Internet:
www.kase.kz
e-mail:
[email protected]
phone:
(+7 327) 237 53 00, 272 98 98, 237 53 11, 272 06 00
fax:
(+7 327) 296 64 02, 272 09 25
address:
291/3, Dostyk av., Almaty, Kazakhstan