Investing Rules for the pension assets recommended by the department of the financial supervision will negatively affect the stock exchange market - the professional actor

11.12.06 23:39
/INTERFAX-KAZAKHSTAN, December 8, 06 / - The head of he financial- investment company BCC Invest Assan Buranbaev considers that the rules of investment activity of pension accumulative funds (APF) and organizations, executing the investment management over pension assets, recommended by the Agency of financial supervision and regulation of the financial market and financial organizations (AFS), will negatively affect development of the domestic stock exchange market. A. Buranbaev reminded at the press briefing on Friday in Almaty that since January 1 2007, according to recommendations of AFS, APF will be able to purchase only the securities, which have the corresponding rating. As the minimal level of rating evaluation, AFS suggests to set the indicator in respect of financial instruments of Kazakhstan organizations not lower than "BB-" by Standard & Poor's (S&P) or rating of the similar level by other international rating agencies, or rating evaluation - not lower than "kzА-" according to he Kazakhstan national scale S&P; in respect of financial instruments of the foreign issuers - not lower than "ВВВ-" S&P or the rating of the similar level by any other international agencies. At that, AFS recommends that the actual volume of investments in the financial instruments, evaluated according to the corresponding level, including in shares, the issuer of which possesses the corresponding rating, must make not less than 70% out of all pension assets in each APF at the expenses of pension assets. In addition, AFS suggests APF 30% pension assets to invest in non-rating securities of the company, however, to which the specific requirements will be assigned. Including, Kazakhstan companies must attend the "A" listing of Kazakhstan stock exchange. By calculations of BCC Invest, 21 companies operate in Kazakhstan, which have high rating by the international rating agencies, out of which 15 companies represent financial sector, the rest - national companies. At the present time of being, A. Buranbaev reminded, there are rules, which restrict the financial investments of pension funds along with the type of the financial instrument, for example, it is possible to invest in GS up to 15% out of the share of assets, in "A" listing securities - not more than 50%, in precious metals - not more than 5% and etc. "Seeing that, the market of investments of pension funds will come down. If it was possible before to invest to 50% in companies, traded in "A" listing categories, and it is about 600 to 1,000 companies by our calculations, and now the market will be compressed to 21 companies," A. Buranbaev said. "This decision will lock the way for companies of the real sector to come to the stock exchange market. It means that companies of the real sector will have to borrow money in banks since then," he says the opinion. The BCC Invest head noted that if the mentioned resolution of AFS takes effect, which is passing through the registration now in the Ministry of justice, companies, possessing the high rating, "will insist on fixing the offering rate as lower as possible". "For other rest 30% APF will keep rising prices, consequently, the offering rate for these non-rating securities will be high enough. And it will be, according to our predictions, at the level or even higher than rates, which banks set. Consequently, the company will lose any interest to enter the stock exchange market: it is easier to for them to get money in banks than on the stock exchange market," A. Buranbaev said. Earlier he noted that companies were interested in the stock exchange market owing to relatively cheap borrowing rate compared to banks' loans. Moreover, he noted that BCC Invest "welcomes changes made by AFS, which are directed to reduce risks while investing by pension funds in any assets". However, according to his words, these requirements will be more efficient to introduce in one or two years in order to provide conditions for some companies to take the corresponding rating according to the new requirements. BCC Invest is the investment daughter of Kazakhstan commercial bank of CenterCredit". Currently, 14 APF operate in the republic, which have 78 branches and 77 representative offices in the regions. 12 organizations execute investment management over pension assets, and out of them 5 are APF, which have license on independent control over pension assets: Accumulative pension fund JSC, SAPF, APF Halyk Savings Bank of Kazakhstan, APF BTA Kazakhstan JSC, APF Capital JSC and APF Kazakhmys JSC. [2006-12-11]