Kazakhstan’s Kaspi.kz (NASDAQ: KSPI) stands out as an innovative fintech and e-commerce leader from a frontier market. As global investors explore emerging opportunities, Kaspi.kz has become a noteworthy stock to consider, combining high growth, strategic acquisitions, and technological innovation.
Opportunities in Kaspi.kz’s Ecosystem
Kaspi.kz has built a diversified platform that integrates payments, marketplace services, and fintech solutions, setting it apart from traditional banks. This aligns with the sentiment expressed by Bill Gates: “Banking as a function is necessary, but traditional banks may not be.” Similar to how technological disruption transformed Soviet-era institutions, companies like Kaspi.kz are reshaping financial services.
Platform Performance and Growth:
Payments and Marketplace Expansion: Revenues grew 34% year-over-year for the first nine months of 2024, with net income rising 23%. The marketplace saw 76% revenue growth, fuelled by increased demand for e-commerce and digital solutions.
Travel and E-commerce Booms: Gross merchandise value (GMV) in e-commerce surged by 95%, and Kaspi Tours reported a 302% jump in GMV.
Strategic Acquisitions:
Acquisition of Hepsiburada: In a significant move to expand into Turkey, Kaspi.kz acquired a 65.4% stake in Hepsiburada (NASDAQ: HEPS) for $1.1 billion. This acquisition opens new growth channels by serving entrepreneurs and SMEs across Kazakhstan and Turkey.
This stealthy entry into Turkey is a strategic shift, despite speculation that Kaspi.kz might target Uzbekistan first.
Global Recognition and Harvard Business School Case Studies:
Kaspi.kz has been the subject of two Harvard Business School (HBS) case studies. The 2019 case explored the company's IPO journey, while the 2024 case focused on Kaspi.kz’s unique culture and innovative digital services. These case studies highlight how trust-building and local expertise have enabled Kaspi.kz to become a "Super App" with high customer engagement and sustainable growth.
The Appeal of Frontier Markets
Kaspi.kz operates in Kazakhstan’s frontier market, a category smaller and less developed than emerging markets but offering higher growth potential. The Kazakhstan Stock Exchange (KASE) is not part of the MSCI World Index, but Kazakhstan falls under the MSCI Emerging Markets Index, within the “others” category.
Frontier markets, while promising, carry specific risks:
Currency Volatility: Kazakhstan’s economy depends heavily on commodities, exposing it to fluctuations in the tenge (KZT) and inflationary pressures.
Political and Geopolitical Risks: Kaspi.kz faced scrutiny from a U.S.-based research firm due to alleged dealings with Russian individuals or companies, reflecting potential geopolitical risks.
Liquidity Constraints: Smaller markets tend to have lower liquidity, which makes large-scale trading more difficult.
Investment Rationale and Outlook
Kaspi.kz’s financial strength, dividend policy, and diversified operations make it an attractive option for investors seeking exposure to emerging fintech and e-commerce sectors. While risks such as geopolitical tensions and economic fluctuations must be managed, Kaspi.kz’s profitability and growth potential provide a compelling reason to include it in globally diversified portfolios.
Why It Matters: As global markets search for new growth opportunities, companies like Kaspi.kz offer exposure to emerging digital ecosystems. Its success also showcases the potential of Central Asian markets, which are often overlooked in favour of larger emerging economies.
Conclusion
Investing in Kaspi.kz represents a high-risk, high-reward opportunity. Its unique position as a fintech leader in Kazakhstan, combined with strategic acquisitions and strong financial performance, offers significant upside. However, it is critical for investors to evaluate potential geopolitical and economic risks carefully.
Ultimately, Kaspi.kz demonstrates how innovation and trust-building in frontier markets can translate into global business success. With its inclusion in Harvard’s case studies and entry into Turkey, Kaspi.kz offers a rare blend of growth, strategic vision, and market expansion—a gem worth considering for investors seeking frontier market exposure.
Rainer Michael Preiss, Partner & Portfolio Strategist at Das Family Office in Singapore
