NSC of Kazakhstan plans new instruments

/IRBIS, Feb 20, 01/ - REUTERS informs, with the reference to the head of the National Securities Commission of Kazakhstan (NSC), Azamat Djoldasbekov, that the NSC, after a long wait for the shares of state enterprises that have to appear on the market after the privatization, decided to launch the market of preferred shares of private companies. He said that more emphasis should be put on the private sector, since the state does not provide the market with the shares, and the working model was the market of preferred shares. It is said that Kazakhstan was able to create the stock market infrastructure and made the pension funds to appear on the market as the major investors with the help of the pension reforms. It is because it was not able to supply the market with the shares of elite oil and metallurgical companies, as the NSC expected. The head of the NSC said that the market of the shares did not exist in Kazakhstan actually. Most of the deals that are made on the market are the deals concluded among strategic investors, and it is only the transfer of shares from one owner to the another, he added. The NSC informs that total volume of the Kazakhstani secondary stock market increased 4.5 times in 2000 due to the stock exchange market, at $118 mln, with the most of the deals ($61 mln) being made with corporate bonds and common shares of Bank TuranAlem, Shymkentnefteorgsintez, Halyk Bank of Kazakhstan. It was planned that the state will sell the shares of "blue chips" to strategic investors, which are state blocks of about 50 major enterprises. However, after three and a half year period only 4 companies remained in the list, which are Aktobemunaigas, Mangistaumunaigas, Ust-Kamenogorsk titanium-magnesium combine and Kazzinc. Djoldasbekov noted that the privatization was continuing though the government was conducting individual talks with strategic investors in order to sell the state block for the highest bid, and the interests of the stock market are not considered. He stated the NSC strategy, which is the development of the stock market irrespective of the sales of the shares by the state. BOND BOOM The head of the NSC said that last year the market of corporate bonds "shoot out". The major buyers were the pension assets management companies (PAMC), which have lengthy and actually free resources of the pension funds and total pension assets is said to have exceeded $800 mln in January of 2001. Municipal bonds issues reached about $170 mln, is said. Great demand for the bonds made the secondary stock market active, however most of the PAMC prefer to keep the bonds in their portfolios until the maturity. It was also mentioned that the "bond boom" became an important step in the formation of honest and transparent business ethics, meaning that more than 70% of all issues were conducted with the participation of financial consultants and legal advisors. Kazakhstani companies understood that more cheaper resources can be attracted on the stock market than from the banks, he added. He said that the yields of the last bond issues had not exceeded 12% APR, while bank loans were about at 20% APR on average, and these low rates are said to be the main reason for non-existence of other investors on the market. Recently, the NSC succeeded in cancellation of 15% tax on the transactions with the bonds and it is expected to draw the banks, insurance companies and foreign investors to the market. PREFERRED SHARES Preferred shares are believed to be an attractive instrument for investing the capitals in the absence of common shares, he said. He added that preferred shares would allow the issuers to raise capital and they would not share ownership with anyone, since the shares have no voting rights. These shares have fixed dividends, therefore they can be considered perpetual bonds, was added. The NSC plans to suggest several companies to conduct additional issues of preferred shares on the stock market. These will be the companies of light and food industry, which are on the growth. They have formed their market and customers already and have transparent and easily forecasted cash flows, is said. Djoldasbekov believes that it would be possible to sell up to 20% of stakes in effective national companies such as Kazatomprom and KazTransOil and it would be not bad to the state with retains controlling block of shares. The country's shares market should get alive when there will be enough new managers, who are not tend "to keep all eggs in one basket", is said.