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Kazakhstan Assets In The Global Context

ყაზახეთი
BM. GE
27.05.24 13:30
234

Kazakhstan currently and Year-to-date 2024 is the 8th best performing stock market in the world and the KZT Kazakhstan tenge currency is the 9th best performing currency in the world against the world’s reserve currency, the United States dollar.

The global financial market speaks a language and investors can learn to read the mind of the market. Financial markets tend to discount the future.

Kazakhstan is relatively speaking young country. It is a multinational country where representatives of more than 130 ethnic groups live in peace and harmony.

Kazakhstan declared its independence from the Soviet Union on December 16, 1991. This means that as of 2024, Kazakhstan is 32 years old as an independent country. The republic of Singapore as an independent country and from 3rd world to 1st is only 59 years old as an independent and wealthy nation.

In January 2024 the Berlin based German Institute for International and Security Affairs (Deutsches Institut für Internationale Politik und Sicherheit) placed Kazakhstan for the first time among the world’s “Middle Powers”.

“Middle Power” recognition underscores Kazakhstan’s growing influence on the global stage. As a middle power, the country plays a vital role in shaping regional dynamics and contributing to international stability and potentially to global growth & prosperity as well as capital market returns for investors.

Rare earth elements are becoming the new oil in the age of artificial intelligence & energy transition.

As Saudia Arabia was the kingdom of oil, Kazakhstan could become the Saudi Arabia of critical materials.

Geopolitics and ESG and climate change will become more important and will drive Earth elements (REEs) or critical materials global demand.

The economy of Kazakhstan is expected to grow by 4.5% real GDP growth this year 2024 and is forecasted to grow by 5% in 2025 and 4.3% in 2026. The current National bank of Kazakhstan rate stands at 14.75% and is expected to decline to about 14%. As per available data:

GDP (Gross Domestic Product): Kazakhstan's GDP was approximately $226.8 billion USD.

GDP per capita: Kazakhstan's GDP per capita was approximately $12,760 USD.

President Tokayev in the 46th singapore lecture organised the Yusof Ishak Institute, refereed to Kazakhstan as a middle power in the world. Many investment portfolios and pension funds of the world have investment exposure to large power countries like the United States of America, the European union and the People’s republic of China. Yet going forward “middle power” countries could transform and empower the investment portfolios of investors from around the world.

Discussing the role of emerging middle powers such as Kazakhstan and Singapore, president Tokayev drew attention to significant changes in the global security landscape, opening up both significant opportunities and serious risks.

The Yusof Ishak Institute, also known as the ISEAS-Yusof Ishak Institute, is a renowned research institution in Singapore dedicated to the study of Southeast Asia. It was established in 1968 and named in honour of Yusof Ishak, the first President of Singapore.

Global investors might not necessarily look at Kazakhstan assets as a middle power in global investment portfolios yet , but the country merits some study and evaluation for investment allocation.

Kazakhstan is generally classified under "emerging markets" rather than developed markets. As a result, Kazakhstan is not included in the MSCI World Index, which comprises only developed markets. Instead, Kazakhstan is part of the MSCI Emerging Markets Index.

The MSCI Emerging Markets Index currently ranks and classifies Kazakhstan under “others” as part of the 21% allocation to smaller emerging markets.

Kazakhstan has several large publicly traded companies that are significant players in their respective industries and where global investors can gain exposure to.

Kazakhstan's flag carrier Air Astana AIRA priced its initial public offer in February 2024, giving the airline a capitalisation of about $847 million, and valuing the offer at $350-370 million.

The airline’s share price currently trades at around $8.40. During President Tokayev’s state visit to Singapore there was news and discussion that Kazakhstan’s flag carrier might start direct flights to Singapore Changi airport. The analyst community and consensus ratings on Air Astana currently stand at buy 100% hold 0% and sell 0%. The 12-month TP target price stands at USD 11.20 implying potential gain of +33.3% from current levels. The analyst community and Air Astana group management expects growth in 2024, driven by increased capacity and expansion of the aircraft fleet.

Halyk bank of Kazakhstan HSBK, a leading and traditional retail bank and kaztomprom KAP the world’s largest uranium mining company have been long time favourites with global investors, due to robust business models, attractive valuation and lucrative cash dividends shared with investors.

In November 2018, Kazatomprom conducted an initial public offering (IPO), listing its shares on the London Stock Exchange and the Astana International Exchange. This move aimed to enhance transparency, improve corporate governance, and attract international investors.

HSBK current dividend yield in Us dollars stand at 12.63% and the 5-year net cash dividends growth rate stands at 15.53%. the current analyst community ratings stand at Buy 80% hold 20% and sell 0%.

The 12-month average analyst TP 9target price of USD 21.44 implies (potential) gain of +17.4% from current levels. Over the last 5 years Halyk bank of Kazakhstan stock has outperformed the Bloomberg BE500 index by +111.86%.

Since the IPO, the share price of KAP has risen +372.91%, outperforming the Bloomberg BE500 index by +321%. Kaztomprom pays a USD dividend yield of 3.82% and the company’s 3-year dividend growth rate stands at +24%. Analyst consensus ratings stand at Buy 75% Hold 25% and sell 0%. The 12-month analyst TP target price of USD 56.27 implies (potential) gain of +23.7% from current levels.

KASPI is a fast-growing, transaction-driven, profitable and dividend-paying bank/ FINTECH business with an aspiration to expand in mid-term across some countries of Central Asia and the Caucasus.

Main listing is on Kazakhstan stock market with an ADR on Nasdaq in New York. The company pays attractive dividend yield of 6.25% in Us Dollars and the analyst community and the current consensus view ratings stand at Buy 90% hold 10% and Sell 0%. The 12-month TP of KSPI currently stands at USD 145.43 implying (potential) gain of +19% from current levels.

The Kazakhstan Stock Exchange (KASE) is the primary stock exchange in Kazakhstan, providing a platform for the trading of a variety of financial instruments. Established in 1993, KASE plays a crucial role in the country's financial system by facilitating capital formation, providing liquidity, and supporting the development of Kazakhstan's capital markets.

KASE is a vital component of Kazakhstan's financial infrastructure, contributing to the growth and diversification of the country's economy by facilitating investment and capital raising activities.

Regulation and Oversight: KASE operates under the oversight of the National Bank of Kazakhstan, which ensures the stability, transparency, and integrity of the market. The exchange adheres to international standards and best practices in its operations.

Infrastructure and Technology: KASE has invested in modern trading infrastructure and technology to provide efficient and secure trading services. This includes electronic trading systems, real-time market data, and robust clearing and settlement processes.

Listing Requirements: Companies wishing to list their securities on KASE must meet specific listing requirements, including financial performance criteria, corporate governance standards, and disclosure obligations. These requirements help maintain the quality and reliability of the listed securities.

Market Development: KASE actively promotes the development of Kazakhstan's capital markets through various initiatives, such as investor education programs, international partnerships, and efforts to attract both domestic and foreign investors.


Kazkh invest

Kazakh Invest is the national investment promotion agency of Kazakhstan. Established to attract and facilitate foreign investment, Kazakh Invest serves as a one-stop shop for potential investors, providing comprehensive support throughout the investment process. Its primary functions include:

Promotion of Investment Opportunities: Kazakh Invest actively promotes Kazakhstan as an attractive destination for foreign direct investment by showcasing the country's investment climate, opportunities, and strategic advantages.

Investment Support and Facilitation: The agency offers assistance to investors at every stage of their projects, from initial inquiries and project development to implementation and operation. This includes helping with the necessary legal and administrative procedures.

Policy Advocacy and Improvement: Kazakh Invest works with the government to enhance the investment environment by identifying and addressing barriers to investment, ensuring that the regulatory framework is investor-friendly.

Project Management and Aftercare: The agency provides ongoing support to investors after their projects have been established, helping to resolve any issues that may arise and ensuring that investments are sustainable and successful.

Sectoral Focus: Kazakh Invest targets key sectors where Kazakhstan has strategic advantages, such as energy, mining, agriculture, manufacturing, infrastructure, and logistics.

Overall, Kazakh Invest aims to make the investment process in Kazakhstan as smooth and efficient as possible, fostering a conducive environment for foreign investors and contributing to the country's economic growth and development.

This article is intended for informational purposes only and does not constitute investment advice, an offer, or a recommendation to buy or sell any financial instruments. Investors should seek independent financial, legal, and tax advice tailored to their specific circumstances before making any investment decisions.

Rainer Michael Preiss, Partner & Portfolio Strategist at Das Family Office in Singapore

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