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
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.
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
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 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.