KASE analysts: share trade volume plunges due to reconstruction of repo market, less retail investors and a too long rally

/KASE, September 21, 09/ - For eight months of 2009 trade volume on Kazakhstan Stock Exchange (KASE) without account of deals on repo transaction market reached KZT175.6 bn (USD1,201.7 m) and dropped against the corresponding period of 2008 by 44.1 % (53.9 % in dollar terms). Despite significant increase in prices from the beginning of 2009 (KASE Index yield as on September 17 this year reached 95.3 % APR), KASE analysts cited a huge fall of activity in the sector, specifically during the last four months. The table below indicates trade volume in the sector in 2009 with breakdown onto months, and comparative data of the corresponding period last year (deals on offering shares may be concluded in the purchase and sale sector). --------------------------------------------------------------- Irregular deals Regular deals Total Year, --------------- --------------- --------------- month bn KZT m USD bn KZT m USD bn KZT m USD ------------ ------ ------- ------ ------- ------ ------- 2009, I 6.8 55.5 12.5 103.4 19.3 158.9 2009, II 44.7 299.6 13.8 93.1 58.4 392.7 2009, III 18.3 121.2 7.0 46.5 25.3 167.7 2009, IV 3.2 21.1 23.0 152.6 26.2 173.8 2009, V 0 0 5.9 39.6 5.9 39.6 2009, VI 1.0 6.7 6.7 44.5 7.7 51.1 2009, VII 2.0 13.3 4.1 27.2 6.1 40.5 2009, VIII 24.7 163.8 2.1 13.7 26.8 177.5 ------------ ------ ------- ------ ------- ------ ------- Итого 100.5 681.1 75.1 520.6 175.6 1,201.7 ------------ ------ ------- ------ ------- ------ ------- 2008, I-VIII 140.9 1,172.0 173.1 1,437.0 314.0 2,609.0 trend, % -28.6 -41.9 -56.6 -63.8 -44.1 -53.9 --------------------------------------------------------------- Notes to table: irregular deals are estimated on the basis of the algorithm specified in chapter 3 of the KASE internal document "Methodology of calculation of activity of Kazakhstan Stock Exchange's members". The table shows, beginning May this year monthly average share trade volume declined more than three times. High indicators in February and August of 2009 resulted thanks to large irregular deals (or series) (ENRC acquired 25 % in Shubarkol Komir, and a sale of Lancaster Petroleum). KASE analysts reported to KASE management last Friday on operation of the Exchange in eight months of 2009. The analysts said a negative factor affecting a local share market was stiffening repo transaction rules, specifically nego repo transactions, with government securities as subjects. Outflow of retail investors was also negative. From the beginning of this year a share of individuals in share trade reached 15.3 % against 27.4 % last year. Higher prices for certain stocks reduced a possibility for aggressive investment strategies. The price-to-earnings ratio for certain companies, specifically in raw materials, varied from 6.0 to 11.0, which are maximums for the last 52 weeks. In other words, the market currently is expecting larger profits for some companies in the future, and it is accounted in current prices. [2009-09-21]