Transcript KASE Standard Presentation dated November 1, 2007

INTRODUCING KAZAKHSTAN
STOCK EXCHANGE INC. (KASE)
Relevant as of November 1, 2007
COEVAL WITH TENGE …
KASE was established on November 17, 1993 under the name
of Kazakh Interbank Currency Exchange – two days after Tenge (the new
national currency of Kazakhstan) was introduced on November 15, 1993.
Nowadays, November 15 is celebrated as the official "Day of Tenge".
"Old" tenge
(1993–2006)
"New" tenge
(since 2006)
YOUNG AND SINGLE …
KASE is a commercial joint-stock company with 70 shareholders
(as at October 1, 2007). The National Bank of the Republic of
Kazakhstan is the largest shareholder. Other shareholders
include: banks, brokerage firms, asset management companies,
pension funds and other professional financial institutions.
Voting method: one share – one vote.
YOUNG AND SINGLE … (2)
Today KASE is the single universal financial exchange in
Kazakhstan with brief but bright history:
1993 – first trades with foreign currency (US dollars)
1995 – first trades with T-bills
1996 – first trades with derivatives (KZT/USD exchange rate futures)
1997 – first trades with listed equities
1997 – first trades with government stacks of shares
1997 – first trades with non-listed corporate securities
1998 – launching of "nego" deals system on KASE (instead of over-thecounter securities market )
YOUNG AND SINGLE … (3)
1998 – first trades with eurobonds of Kazakhstan
1999 – first trades with listed corporate bonds
1999 – first trades with municipal bonds (since 2005 the issuance of these
bonds is prohibited)
1999 – launching of the "nego" repo market
2001 – first trades with bonds of international financial
organizations (IFO)
2001 – launching of "automatic" repo market (the most massive and
active sector of the KASE market)
2002 – first trades with the promissory notes
2003 – first trades with foreign T-bills (Russia 2028 & Russia 2030 )
YOUNG AND SINGLE … (4)
2006 – first trades with foreign corporate bonds (JP Morgan and Merrill
Lynch)
2006 – IPO of KazMunayGas Exploration and Production shares
with the use of KASE settlement system
2006 – secondary distribution of KAZAKHMYS PLC (UK) shares
with the use of KASE settlement system
2007 – special trading floor of the Regional Financial Center of
Almaty city was founded on the base of KASE (founded to attract foreign
issuers and investors)
2007 – launch of the new index on the share market – KASE
Index, which continued the number series of KASE_Shares Index
IMPRESSIVE DYNAMICS …
300
Other
265.5
USD bn
Repo
250
Corporate securities
200
Public securities
169.3
Derivatives
USD bn
Currencies
150
100
50
0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
10 m
2007
IMPRESSIVE DYNAMICS … (2)
300
250
220.5%
KASE, USD bn
250
200
% to GDP
200
GDP, USD bn
150
150
100
100
50
50
0
0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
10 m
2007
UNIVERSAL EXCHANGE …
STF RFCA,
496.5 USD m (0.2%)
Currencies,
71,942.6 USD m
27,1%
10 m 2007:
265,543.8
53,0%
USD m
Autorepo with public
securities,
140,627.0 USD m
3,5%
2,8%
4,7%
8,4%
Direct repo with public securities,
1,132.7 USD m (0.4%)
Corporate securities,
9,158.4 USD m
Public securities,
7,351.2 USD m
Direct repo with corporate
securities, 12,492.0 USD m
Autorepo with corporate
securities, 22,343.6 USD m
In total, repo (money) market takes 65.2% of general KASE turnover
UNIVERSAL EXCHANGE … (2)
KASE serves the markets of:
 "nego" 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)
 IFO 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 Kazakhstani 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 borrowing and lending.
KASE foreign currencies market – the basic trading site for the
National Bank of the Republic 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
10 м
31
Category "A"
Category "B"
Corporate bonds
10 м
31
Category "A"
Category "B"
32
27
61
61
20
7
9
13
9
8
8
1999
2000
2001
13
12
2002
20
27
30
38
40
30
1
2003
2004
2005
2006
2007
1999
10 20
1 2
2000
2001
6
2002
34 39
11
2003
49
6
7
2004
2005
17
2006
25
2007
LISTED COMPANIES (in total)
Equities
10 м
Corporate bonds
TOTAL
10 м
70
68
62
54
86
40
114
78
17
17
21
25
45
45
56
68
11
1999
2000
22
2001
17
2002
94
49
36
1
79
122
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
100%
10 м
Corporate bonds
10 м
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
Global Industry Classification Standard (GICS) of S&P is used
"PURE" CORPORATE SECURITIES MARKET
10,0
8,0
Turnover, USD bn
12,0
6,0
4,0
2,0
Equities
Corporate bonds
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
10 m 2007
Total KASE turnover for 10 months of 2007 with the equities – 6,023.1 USD m,
with the corporate bonds – 3,631.8 USD m.
"PURE" CORPORATE SECURITIES MARKET (2)
140
120
100
80
Daily turnover, USD m
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 – 28.7 USD m,
with the corporate bonds – 16.6 USD m.
"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 Index
3000
2,808
2,876
(12.02.07)
(17.07.07)
2,394
(19.04.06)
2500
2,387
(20.08.07)
2000
1500
216
1000
(05.01.05)
500
01.10.2007
01.07.2007
01.04.2007
01.01.2007
01.10.2006
01.07.2006
01.04.2006
01.01.2006
01.10.2005
01.07.2005
01.04.2005
01.01.2005
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
Total assets, % to GDP
60
GDP
100
80
60
40
40
20
20
0
0
1998 1999 2000 2001 2002 2003 2004 2005 2006
9m
2007
Institutional investors assets
at the end of 2006 reached
78.5 bn 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 m 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 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 IFOs to place their bonds in Kazakhstan
• Ready to introduce T+n settlement basis for the foreign operators (only for
eqities)
•
•
•
•
•
Launching currency swap market
Listing unit funds units
Holding active marketing campaigns
Modifying trading system
Launching new version of KASE web-site
CONTACT US …
Internet:
www.kase.kz
e-mail:
[email protected]
phone:
(+7 727) 237 53 00, 272 98 98, 237 53 11, 272 06 00
fax:
(+7 727) 296 64 02, 272 09 25
address:
291/3a, Dostyk av., Almaty, Kazakhstan