Pension funds in Kazakhstan are waiting for new instruments for investments

/Almaty bureau REUTERS, Oljas Auezov, June 20, 02/ - Kazakhstan pension funds - biggest investors at the country's stock market - are still unsatisfied with the available set of instruments and their yield and wait for improvement of the situation, having received the right for purchasing securities of foreign issuers with credit rating "A". Assets of high growth pension system of Kazakhstan approach to $1.5bn, however about 60% of means with the norm of not less than 40% have been invested into state securities that are of low degree of yield, more than a half of them are eurobonds of Kazakhstan. 20% more fall to the share of corporate bonds of domestic issuers, about 10% are in deposits. For the time present, about three percent of means have been invested into securities of foreign issuers, however the National Bank which regulates pension funds activity does not want to change the situation. The National Bank's decree is expecting to be registered. The decree will allow to invest up to 10% of pension assets into securities of foreign issuers which have "A" credit rating on classification Fitch and Standard & Poor's or similar rating from Moody's. "We hope that extension of instruments list which are available for us will decrease the pressure upon the market ", - said the chairman of pension assets management company (PAMC) ABN Amro Asset Management Natalya Brezhneva on Thursday. Before, PAMC which faced continued yield decrease at domestic market could buy foreign issuers' securities only with "ААА" and "АА" ratings. "Appearance at the market (instruments with "А" rating) is of more importance in accordance with their high yield, - said Brezhneva. - Their yield may be considered even comparable with the yield of domestic instruments by today". Trader of PAMC Zhetysu Yerken Nurkenov considers that the advantage of securities with "А" rating is their higher liquidity in comparison with domestic instruments, and he also notes the bonus to the yield of eurobonds. "The yield of securities with "А" rating is a bit higher than Kazakhstan eurobonds-07," - he said. Kazakhstan has "ВВ" rating on Fitch and S&P classification. Participants of the market hopes that the National Bank's innovation will promote increase of yield of Kazakhstan securities, which they consider abnormally low. "Kazakhstan eurobonds have yield on the level of bonds with "ААА" rating - this is nonsense," - said one of the traders. "The yield that was set at the market does not suit us ", - said him the manager of the sector on securities trade on Eurasian bank Gulbakhram Duganova. Traders note that the real yield of state securities is close to zero. Brezhneva from ABN Amro Asset Management believes that means transfer to the opening segment of the market of foreign securities will stop the growth of prices at domestic market. "We expect that yield decreasing at domestic market has paused and it will raise a little bit," - said Brezhneva. The National Bank,in its turn, follows the policy, which is directed to diversification of pension funds portfolios. The head of the National Bank Grigory Marchenko used to say that in the future the slat compulsory investing into state securities, which is on the level of 40% now, will be decreased. By the end of the current year, judging on Marchenko's estimations, the share of state securities in pension funds' assets will reduce to 50%. This in high degree will be caused by redemption of Kazakhstan eurobonds issue in the amount of $300m in October of the current year. Monetary authorities says at present that do not intend to refinance issue in full volume and actively discuss ways of attracting releasing means. [2002-06-20]