On September 9-12, 2024, for the first time in the history of Kazakhstan, Almaty hosts the 26th Annual General Meeting of the Asia-Pacific Association of Central Depositories (ACG). The organizer is the Central Securities Depository of the Republic of Kazakhstan (KCSD).

On September 10, the panel discussions were held with the participation of foreign speakers, as well as heads of the National Bank of Kazakhstan, the Agency of the Republic of Kazakhstan for Regulation and Development of Financial Market of Kazakhstan, KASE, and stock market experts. The work of the Kazakh and international securities markets, digitalization, the use of AI, improving the quality of services, risk management of central depositories and many others were discussed at the forum.

At the event, the Governor of the National Bank of Kazakhstan Timur Suleimenov noted that the Asia-Pacific region is a dynamic market with a high investment potential due to sustainable economic development, significant infrastructure investments, technological advances and a growing appetite for cross–border investment.

At the same time, according to his words, building a strong institutional partnership between Central Asia and the Asia-Pacific region will open up unprecedented economic potential for both sides.

The Governor of the National Bank of Kazakhstan also emphasized that Kazakhstan is a reliable country for investment. The republic has attracted more than $450 billion worth of FDI over the years of independence. According to his words, this is the largest indicator among the CIS countries per capita. In addition, the country shows economic growth. Last year, Kazakhstan’s GDP reached 5.1% in 2023 due to mining, manufacturing and services. At the same time, the National Bank of Kazakhstan has achieved a significant reduction in the inflation rate to 8.4%. It is expected to decrease to 5% in a year.

Deputy Managing Director of the International Monetary Fund (IMF) Bo Li assessed the development of the economies of the Caucasus and Central Asia, showing resilience despite various economic shocks. Bo Li noted that stable growth is expected among oil importers amid domestic demand, as well as further expansion of carbon industry and oil exports. At the same time, well-designed reforms, according to him, could lead to 5-7% growth in countries over the next 4-6 years.

Having said that, new technologies, including digital, also have a major impact on many sectors – from manufacturing to healthcare and financial services. As an example, he cited an IMF study, whereby artificial intelligence could affect 40% of jobs globally and 60% of jobs in advanced economies. Therefore, investments in digital skills and social insurance will be crucial to support the development of artificial intelligence, improving productivity, and mitigating socio-economic risks.

“The IMF is committed to help countries in implementing successful product policies and promote global cooperation, including strengthening the integration of financial infrastructure between Asia-Pacific and Central Asian countries” – Bo Li added.

Chairman of the Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan Madina Abylkassymova emphasized that building mutually beneficial relations between the Asia – Pacific region and Central Asia is of strategic importance in the current conditions of the global financial system development.

Telling foreign speakers about the Kazakhstan stock market, she noted its dynamic development. The capitalization of stock market amounts to $70 billion or 28% of the country’s GDP. The volume of corporate bonds traded on KASE is $30 billion or 12% of GDP. Over the last 5 years, the volume of attracted funding in the capital market amounted to $19 billion. The number of retail investors has reached 3 million, which shows their rising role as a source of financing for business, » -said Madina Abylkassymova.

Kazakhstan works out to ensure the integration of the infrastructure of the Kazakh stock market into the ecosystem of global capital markets. In addition, work is currently underway to enable international accounting authorities such as Euroclear and Clearstream can open direct accounts with the Central Depository, and banks to provide account operator services.

Thus, the Central Securities Depository turned into regional settlement hub with a full range of depository and banking services.

According to her words, the implementation of the principles of sustainable development in the financial market remains relevant. Today, all the necessary legislative and regulatory mechanisms have been created to stimulate the development of “green” financing.

To ensure interregional links between capital markets, the Agency together with the National Bank and the Ministry of Finance applied for observer status in ASEAN+3 Bond Market Forum. This important platform gives an opportunity to exchange experience in development of bond markets.

Mark Gem, Chairman of the Risk Committee of Clearstream, noted that the current task is to unite the financial market infrastructure between Asia-Pacific region and Central Asia on a global scale. According to his words, the Central Securities Depository of Kazakhstan fully fulfills its mission and supports the bridge between the West and the East, providing many opportunities.

“Now is a time of great challenges, there are difficulties and risks in our work. Geopolitical reality can change the decades of established practice, and now we will have to change our priorities. Vulnerabilities are growing, climate change is also on the agenda. We see the development of digital tools, including AI, that might be against us. The regulator is becoming more specific and demanding. Central depositories are expected to be more efficient, faster, more transparent with lower costs and risks.”

In the changing conditions of the global market, Chairman of KCSD, Adil Mukhamejanov, suggested paying attention to the several key areas in which cooperation will be especially effective for infrastructure organizations.

Firstly, the continued advancement of digital technologies, including distributed ledger technologies, presents both opportunities and challenges. These innovations are harnessed to enhance efficiency, transparency, and security in the markets, while also addressing potential risks.

Secondly, as the global economy continues to evolve, the importance of sustainable finance is becoming ever more apparent.

“By integrating environmental, social, and governance (ESG) criteria into our operations, we can contribute to the broader global effort to combat climate change and promote inclusive growth, ” – added Adil Mukhamejanov.  

Lastly, the regulatory environment in which we operate is becoming increasingly complex. The need for alignment and cooperation among our institutions is more pressing than ever. By working closely with regulators and policymakers, we can help shape a regulatory framework that supports innovation while safeguarding the integrity of the markets.

Reference:

ACG is an Association of Central Securities Depositories of the Asia-Pacific region, established in 1997 with the main goal of strengthening cooperation in various sectors to improve the efficiency of clearing and settlements. KCSD has been a member of the ACG for 17 years (since 2007).

The Central Securities Depository (KCSD) is a key infrastructure organization of Kazakhstan’s financial market in the sphere of post-trading services and has been providing services for more than 25 years. It is a single center for recordkeeping of securities ownership rights, settlement of all exchange and over-the-counter transactions. Moreover, KCSD also provides access to international securities settlement systems for the local participants.

As of January 1, 2024, total volume of financial instruments in nominal holding of KCSD amounted to KZT 126.61 trillion, recording an increase of 13.9% in comparison with the previous year. The number of securities issues has also increased, amounting to 2,386 issues at the beginning of 2024. To date, over 3 million brokerage accounts have been registered with KCSD.

On September 5-6, 2024, the Astana International Financial Centre (AIFC) hosted the annual financial conference “Astana Finance Days: Innovate. Invest. Impact”. Since its inception in 2018, Astana Finance Days (AFD) has been the premier platform for uniting top financial experts, investors and business leaders from across the Eurasian region.

This year’s conference gathered over 4000 participants from 69 countries. A total of 186 international and Kazakhstani speakers engaged in 38 panel sessions, covering key themes of “Innovation”, “Investment”, “Impact”, “Women in Arbitration” and “AIFC Community”. Speakers and participants discussed cutting-edge technologies in the financial sector, Kazakhstan’s investment opportunities, and the role of finance in driving sustainable development and positive societal change.

The conference was officially opened by AIFC Governor Renat Bekturov, who delivered a keynote speech during the panel session “Finance, Law, and Development: Shaping the Future of Infrastructure Investment in the Region”. In his remarks, the Governor emphasised that the AIFC has emerged as a key hub for attracting investment into Kazakhstan’s infrastructure projects. This is evidenced by the companies established in the AIFC that are engaged in logistics, including projects related to the Middle Corridor. However, he pointed out the need to attract investment and financing for the transport and logistics sector, green infrastructure for renewable energy production, and to fulfil the country’s commitments to achieving carbon neutrality.

Hussein Ozkhan, Acting Managing Director for Central Asia at the European Bank for Reconstruction and Development (EBRD), highlighted the need for at least €17,5 billion in investments for the Middle Corridor, in addition to developing “soft” infrastructure, such as digitalisation, tariff identification and customs control, etc. Moazzam Mekan, Lead for Public-Private Partnerships in South Asia within IFC, emphasised the importance of mobilising private capital for these efforts.

During the event, the Astana International Exchange (AIX) announced the inclusion of I-REC (International Renewable Energy Certificates) in its range of responsible finance products. The I-REC certificate confirms that the energy was produced from renewable sources and corresponds to 1 MWh of clean electricity. I-REC represents 99% of the total voluntary market of renewable energy certificates in the world and is recognized in more than 50 countries.         

AIFC Governor also announced the launch of the AIFC Business League, a new initiative aimed at uniting top executives, business owners and investors to foster collaboration and implement successful projects both locally and internationally.

A landmark event at AFD 2024 was the adoption of the AIFC Venture Studio Rules, providing a legislative framework for the creation of venture companies. These rules establish legal clarity for financial and non-financial support for startups, facilitating collaboration between entrepreneurs and startups in the market.

In addition, a memorandum of understanding was signed between TechHub Limited (AIFC) and Truleum Venture Studio Limited, a Dubai International Financial Centre-based venture studio, aimed at launching the “Fintech Venture Studio” at the AIFC. A second memorandum was signed between Tech Hub AIFC and White Hill Capital Ltd., focusing on the joint development of digital solutions to support innovative projects.

A practical guide on AI and data protection was also presented at the event, emphasising the AIFC’s commitment to creating a secure and innovative environment for delivering financial services within Kazakhstan and beyond.

It was announced that a regional office for Chengdu and the Western China Financial Centre in Central Asia has been established within the AIFC jurisdiction by CDIC International. This office aims to promote the growth of cross-border investments between Chengdu-based companies and investors and projects in Central Asia. Additionally, TFI Securities and Futures Limited, an investment firm based in Hong Kong, has been accredited as a non-member entity of the AIFC.

Additionally, a country report on Islamic finance, prepared by the AIFC and CSQ Law with support from the Islamic Development Bank, was presented during the panel session. The report offers a comprehensive analysis of the landscape, challenges, opportunities and prospects for Islamic financial services in Kazakhstan.

The official launch of the AIFC Islamic Finance and Business Association also took place. The Association is designed to serve as a platform for uniting professionals, entrepreneurs, academics and stakeholders in the Islamic finance and business sector in Kazakhstan.

For the first time in Kazakhstan, the AIFC Court and the AIFC International Arbitration Centre, in collaboration with the global organisation Arbitral Women, hosted a “Women in Arbitration Day” at the conference. Participants also had the opportunity to meet Carolyn Lamm, a Partner at the Washington, D.C. office of the law firm White & Case, globally recognised as an expert in international arbitration. 

The AIFC Academy announced the development of unique minor programmes, supported by Freedom Broker and the Freedom Shapagat Corporate Fund. These programmes, to be launched at leading universities in Kazakhstan, will cover 10 specialised areas corresponding to the evolving challenges of today’s financial and economic landscape. The initiative will offer undergraduate and graduate students a deeper understanding of asset management, fintech, financial market analysis and regulation, sustainable development and international commercial dispute resolution.

Additionally, the new Tabys Education app was launched, the educational module, aimed at improving financial literacy among the public. Tabys Education provides users with essential knowledge on managing personal finances and the art of investing.

Reference: 

The Astana International Financial Centre (AIFC) is an independent jurisdiction with a favourable legal and regulatory environment and a developed infrastructure for starting and doing business, attracting investment, creating jobs and developing Kazakhstan’s economy. www.aifc.kz  

AIFC Media Relations 

Ainur Issabayeva 

Press secretary 

Phone: +7 701 777 6558, е-mail: pr@aifc.kz 

The new CEO of KazMunayGas, Askhat Khassenov, gave his vision of the company’s future. Khassenov, who took the leadership of the key oil and gas company of Kazakhstan, in his interview for the Kazakhstanskaya Pravda, local broadsheet, emphasized the need to optimize corporate standards to hasten the processes and improve performance.

Founded in 2002, KazMunayGas has been a listed company since 2022, actively engaged in oil and gas exploration, production, processing, and transportation. In 2023, the company paid out a record 300 billion KZT (approximately USD 670 million) in dividends to its shareholders and contributed 1.2 trillion KZT (approximately USD 2.7 billion) in taxes to the national budget, demonstrating steady and dynamic economic growth.

In 2023, Kazakhstan produced a total of 90 million tons of oil (approximately 660 million barrels), of which 23.5 million tons (approximately 172 million barrels), or 26%, were produced by KazMunayGas.

Khassenov noted that the company is actively investing in new projects, such as the Kalamkas Offshore-Khazar-Auezov development, valued at USD 6 billion, showcasing the ambitious development plans for the Caspian region. Deep-well drilling activities are currently underway in the Kyzylorda and Aktobe regions.

One of the company’s outstanding achievements is the launch of the KEBCO (Kazakhstan Export Blend Crude Oil) brand, which has been actively quoted since last year, underscoring Kazakhstan’s status as a major player on the global oil and gas stage.

KazMunayGas also plans to expand the capacity of PetroKazakhstan Oil Products LLP in Shymkent and increase the throughput of the Atyrau-Kenkiyak and Kenkiyak-Kumkol pipelines. In 2022, KazMunayGas’s local plants (the company also owns refining assets in Romania) refined a record 17.8 million tons of crude oil, demonstrating the strong potential of Kazakhstan’s existing refineries.

In terms of petrochemical projects, the company is implementing polyethylene, polyethylene terephthalate, and urea projects, despite their long-term payback periods and high costs. Notably, Kazakhstan successfully built and launched a high-quality polypropylene production plant in 2022, with a capacity of 500 thousand tons, and now exports large volumes of polypropylene to China and Europe.

The company is actively working to reduce the environmental footprint of its operations, including ecosystem rehabilitation and emission reduction projects. Over the last five years, KazMunayGas has reduced greenhouse gas emissions by 15%. Additionally, Kazakhstan, in collaboration with the American biotechnology company LanzaJet, is seriously exploring large-scale production of eco-friendly aviation fuel (SAF). An article detailing the project’s start-up prospects is available on the company’s website.

Askhat Khassenov’s interview gives the impression of a charismatic leader. His vision for the company’s development inspires optimism and confidence in the future of KazMunayGas. Time will tell to what extent these ambitious plans will be realized, but the company’s serious and persistent systematic efforts already command respect.