FEAS Yearbook FEAS Yearbook 2009 | Page 82

FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT APRIL 2009 KAZAKHSTAN STOCK EXCHANGE Azamat Joldasbekov President The 2008 global financial turmoil obviously had an affect on Kazakhstani financial market. As many developing markets on one hand Kazakhstan is not fully integrated to the global markets and thus is not directly influenced by the crisis in the global financial industry. At the same time due to its relatively young history of development it lacks the strength to withhold such economic shocks even if their affects are indirect. The overall country’s economic growth rates have considerably slowed down and prices of the Kazakhstani most liquid shares dropped below their book value. In 2008 Kazakhstan Stock Exchange (KASE) lost 42.2 % of its market capitalization decreasing to 31.1 billion USD. The overall volume of trades in all sectors of the market was USD 263.2 billion and increased by 21.3 % in compare to 2007. HISTORY AND DEVELOPMENT Founded on November 17, 1993 Kazakhstan Stock Exchange (KASE) is the only Stock Exchange in Kazakhstan. It represents a universal financial market with the following major sectors: foreign currency, government securities, corporate securities, repo and derivatives. KASE is a member of the International Association of Exchanges of the Commonwealth of Independent States, the Federation of Euro-Asian Stock Exchanges, and in 2008 obtained an affiliate status at the World Federation of Exchanges. It continues working actively on establishment of bilateral and multilateral relations with the foreign companies, exchanges and international financial institutions. KASE is regulated by the the Agency for Regulation and Supervision of Financial Markets and Institutions, which among other responsibilities executes the main functions of state control and supervision of the security market. Creation of a Regional Financial Center of Almaty (RFCA) in 2006 opened new opportunities for the Stock Exchange and equity market as a whole. Kazakhstan Stock Exchange was legally determined as an operator of the special trade floor of the Regional Financial Center of Almaty. During the following year, Kazakhstan Stock Exchange elaborated and adopted a new 2007-2010 development strategy, obtained a status of a commercial organization, adopted the Code of PAGE 80 In 2009 the KASE plans to continue moving towards its development strategy goals, which would require greater efforts from the company and mobilization of resources. The shares trade volume collapsed to 3.8 billion with nearly 57.1 % decrease in compare to 2007, corporate bonds - to 3.7 billion with 15.1 % decrease in compare to 2007, whereas foreign currency market jumped up 51.9 % totaling to 138.9 billion and repo market turnover increased 4.6 % totaling 109 billion USD*. Regardless of unfavorable conditions KASE managed to attract new issues in 2008. The number of newly listed companies increased by 58 % in compare to the previous year. The Kazakhstani financial markets regulator is initiating necessary changes to minimize the risks of investors and improve market conditions. Joint efforts of the government and private sector should bring to improvement of market conditions in the long run. Corporate Governance and began the process of additional capitalization. With 2008 global financial turmoil, KASE revised some of its previous plans and postponed the demutualization of its shares. The stock exchange focused on other issues described in the company’s Development Strategy. It completely revised the structure of its web-site making it more convenient for the users; introduced changes into the trading system; revised the listing rules and categories to reflect changes evolved from the merger of the Main Trading Floor with the RFCA Special Trading Floor. KASE introduced new financial instruments and seriously considers further diversification of the existing range of the financial instruments and services offered by the exchange to its clients. FUTURE OUTLOOK Kazakhstan Stock Exchange Inc. (KASE) will continue further improvement of the services provided by the exchange to the market participants, launching new attractive markets and developing its business infrastructure. In 2009 we will promote growth of the newly introduced instruments in Kazakhstan, such as currency swaps, continue further improvement of the trading system and diversifying information disclosure channels aimed at supporting KASE 2007-2010 Development Strategy. In 2009 KASE plans to continue moving towards its development strategy goals, which would require greater efforts from the company and mobilization of resources. With new reforms, KASE hopes to further develop Kazakhstan’s securities market reaching high international standards, to contribute to the overall economic development of the country, as well as to promote development of the financial markets in the Central Asian region. * At the beginning of 2009 KASE changed the methodology of the trade statistics (in repo and currency swaps sectors) and applied these changes in compiling the results of 2008. Please refer to http://www.kase.kz/en/news/show/1064107 for detailed information on this methodological modification. The development strategy represents a comprehensive document that describes organizational and structural reforms, lists priority areas and phased approach, linking identified performance factors with strategic initiatives and projects designed to develop and optimize organizational activities. The text of the strategy can be found on KASE web-site (www.kase.kz). On the international side of its operation, KASE will continue its work with the governmental agencies and international organizations to promote development and visibility of the Kazakhstan financial market, as well as its compliance with mutually recognized international norms and standards. The exchange plans to continue maintaining its leadership role in the Central Asian region and improve bilateral cooperation with exchanges across the globe. In the environment of uncertainty with which the global financial markets are entering 2009, KASE is planning to maintain a high degree of flexibility to address the current conditions of the market, its urgent needs and potential. At the same time, the core principle of KASE to service its market participants as stable, transparent and efficient service provider will remain unchanged.