KASE Chairperson Alina ALDAMBERGEN:
KASE IS FOCUSED ON INCREASING THE FINANCING OF SMALL AND MEDIUM-SIZED ENTERPRISES
Following the instruction from President of Kazakhstan Kassym-Jomart Tokayev to combine the potential of the two Kazakhstan-based exchanges, the Kazakhstan Stock Exchange (KASE) and the Astana International Exchange (AIX), a new holding may be organized in the republic in order to support further development of the domestic stock market. The chairperson of KASE, Alina ALDAMBERGEN, told News Agency Interfax-Kazakhstan in an interview about the work that KASE and AIX are doing in this direction, as well as about the spillover from the sanctions against one of the KASE stakeholders, which is Russia’s Moscow Exchange.
- Are there any new listings that are expected to take place this year and the following years?
- The first half of this year saw positive tendencies in the listing of corporate securities, which also included new issuers. All in all, the KASE listed 65 bond issues by 42 issuers and one issue of shares by Air Astana, which successfully conducted an IPO in early 2024. This year, private placement of corporate bonds has continued to gain popularity, and the same trends could be seen the previous year. As many as 22 bond issues categorized as private placement have been listed on the KASE this year.
At the same time, the number of issuers in the sector of small- and medium-sized enterprises (SME) is also increasing. For instance, in 2023 the KASE listed on its Alternative Platform nine bond issues by eight non-financial organizations operating in the SME sector, and three of them attracted financing under the National Entrepreneurship Development Project for 2021-2025, using an instrument for subsidizing the coupon rates. The KASE provides all possible support for the SME sector by offering listing benefits to the non-financial organizations operating in the priority sectors of the national economy. If we take into account the issuers that are now in the pipeline, the total number of issuers is expected to grow further by the end of this year within the framework of the National Project.
We anticipate that their number will have increased by about 120-130 corporate issuers by the end of 2024, which would be comparable to the previous year.
- Do you plan to launch any new products?
- The KASE is actively working towards expansion and diversification of financial instruments that can be traded on its platform. However, the launch of new products will mainly depend on the market needs and demand for certain instruments, as well as on the international trends in the capital market and other external factors, such as changes in the legislation.
Digitalization is, undoubtedly, one of the key growth areas in the financial market, and the KASE is also exploring possibilities in this area. Nowadays, digital financial assets open up new prospects for all market players, for such instruments can be stored, transferred and recorded more easily.
In the next five years, the digital financial instruments may become one of the most popular ones on the market, given that the issuance of digital assets is much simpler and cheaper than the issuance of traditional securities. Owing to these advantages, the tokenized securities have drawn the attention of both investors and issuers.
Recently, we have been working to create infrastructure for trading in tokenized bonds using blockchains. To make this happen, we need to bring our systems in line with the international IT and security standards.
Furthermore, the Kazakhstan Association of Financiers and the financial market players are today discussing the existing Law on Investment and Venture Capital Funds in view of the international best practices and global trends. Necessary amendments to the legislation would allow for the creation of new types of investment funds in the collective investment market and would open up new opportunities for retail investors.
- What projects does the KASE plan to carry out this year?
- The KASE development strategy for 2022-2024 will have been implemented by the end of this year, and new goals and objectives will be set for a next three-year period. We are actively working to increase SME financing, including through the National Entrepreneurship Development Project, which subsidizes the coupon rates. We offer training courses to increase the number of retail investors in the stock market. We are also working to improve the liquidity of the stock markets, including the market of government securities and the KASE Global market.
This year, we are making necessary preparations for the KASE Clearing Center to be given an issuer rating, and we are also working to be compliant with the ESMA requirements (European Securities and Markets Authority).
Another area of the KASE development is ESG financing and development of "green", social and other sustainable development bonds. So far, this area of development has been explored mainly by international development institutions, but a few Kazakhstani companies and microfinance organizations have already joined them and have issued and placed their bonds to finance ESG projects.
In the near future, we will launch a new upgraded website of the KASE which will be more efficient, more functional and more convenient for the use; we will also launch a service platform in order to significantly simplify the interaction between the KASE and the professional players of the market.
- Could you please tell us about the implementation of the president’s instruction to combine the potential of the KASE and the AIX? The head of the National Bank Timur Suleimenov said earlier that the process had been paused because of the sanctions against one of the KASE stakeholders, which is Russia’s Moscow Exchange. What would be the best solution for the KASE in this situation?
- The head of state ordered that the potential of the two exchanges should be combined. An option for a merger of the two exchanges is not on the table. The combined potential of the exchanges would entail synchronization of their activities in order to ensure development of the stock market, to attract foreign investors and to support economic growth in Kazakhstan. We are considering a possibility of creating a holding that would make strategic decisions in the best interests of the domestic market.
The operations of the KASE and the AIX are governed by different legislation, but the issuers remain within the jurisdiction of Kazakhstan and operate in accordance with the legislation of the republic. That is why, the exchanges can choose to register their bond issues either with the Astana International Financial Center (AIFC) or with the Agency for Regulation and Development of the Financial Market, and they can issue their securities either on the AIX or on the KASE
- Some mass media reported that the KASE plans to open an office in Astana. Will the office be based at the AIFC? Can it be regarded as a step towards a merger with the AIX? Does the KASE plan to relocate to Astana?
- The KASE opened an office in Astana back in 2023 in order to improve liaison with our clients and to ensure a reliable operation of the KASE in the event of an emergency. The office in Astana is now being supplied with necessary resources, including personnel and equipment. This office is essential to the overall operation of the KASE.
The KASE and its subsidiary, the KASE Clearing Center, are the key organizations for ensuring the stability of Kazakhstan’s stock market; we are also implementing a number of projects targeting the same purpose, and the opening of the Astana office is just one step from our action plan. Currently, more than 1,500 financial instruments are traded on our platform, and we continue to explore new opportunities for the investors.
- The sanctions against the Moscow Exchange have had a significant impact on the operation of the KASE. What is the status of the negotiations on the purchase of the Moscow Exchange's stake in the KASE? What measures are being taken to mitigate the impact of the sanctions on the KASE?
- We are now considering options for reducing the risks arising from the sanctions. The KASE and the KASE Clearing Center are the most important players in Kazakhstan’s stock market.
The fact that one of the KASE stakeholders is under sanctions poses a risk for the operations of the exchange and adversely affects our relations with foreign financial organizations and partners.
We are conducting negotiations about a stake purchase from the Moscow Exchange. This stake will be purchased either by the KASE or by a third party but with an approval from the KASE. In any case, the KASE will take measures to ensure a stable operation of Kazakhstan’s stock market.
- Thank you for your time!
July, 2024
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