Category Archives: Central Asia & South Caucasus News

Passenger numbers are rising, says private Kazakh airline

FEB. 13 2017 (The Conway Bulletin) — SCAT, a privately-owned airline based in Shymkent in south Kazakhstan, increased its passenger numbers to 1.269m in 2016 up from 1.229m in 2015, media reported. The slight increase in passenger numbers, though, may mask a drop in relative demand, in-line with the poor economic conditions, because SCAT has increased the number of flights and routes it flies. SCAT mainly flies domestic routes, although it is adding more foreign destinations. In 2013, a SCAT plane crashed near Almaty killing 21 passengers and crew.

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(News report from Issue No. 317, published on Feb.17 2017)

Biathlon team cleared of drug-taking, says Kazakh minister

FEB. 14 2017 (The Conway Bulletin) — Kazakhstan’s culture and sports minister, Arystanbek Mukhamediuly, said that the biathlon team had been cleared of taking any performance enhancing drugs ahead of the World Championships in Austria. Austrian police raided the team’s hotel last week on the eve of the competition after, media reported, finding an empty box with discarded medical equipment.

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(News report from Issue No. 317, published on Feb.17 2017)

S. Ossetia court sentences Georgian man

FEB. 13 2017 (The Conway Bulletin) — A court in the Georgian breakaway region of South Ossetia sentenced a Georgian man to 20 years in jail for sabotage and terrorism, media reported, in a move that is likely to inflame tensions with Tbilisi. The man, 49 year-old Giorgi Giunashvili, was accused of slipping over the de facto border between South Ossetia and Georgia to attack targets. The Georgian government has called the imprisonment illegal.

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(News report from Issue No. 317, published on Feb.17 2017)

Stock market: KAZ Minerals, Georgia Healthcare

FEB. 17 2017 (The Conway Bulletin) — Georgia Healthcare’s shares surged 8.4% to near an all-time high of 379/$1 after earnings results showed that it had tripled its pretax profit in the fourth quarter of last year thanks to organic growth and acquisitions.

It also said that by the end of 2018, it expects to have doubled its revenues compared to 2015.

Long a favourite for investors looking to invest directly into the South Caucasus, Georgia Healthcare stock gives them a slice of the growing Georgian private healthcare sector.

The only downside of the earnings results was a pretax loss for its insurance division. Still, analysts were bullish. Jefferies increased its target price on Georgia Healthcare to 435p from 420p. Numis Securities stuck with its target price of 420p.

The other big mover of the week was KAZ Minerals, the Kazakhstan-focused copper producer, which finished up 5.7% at 559p. On Tuesday its shares had peaked at 592p, its highest level for nearly four years.

Copper prices have recovered since they started to fall in mid- 2015. KAZ Minerals also announced the start-up of new production in Kazakhstan.

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(News report from Issue No. 317, published on Feb.17 2017)

Turkmen leader wins another seven years in power

FEB. 12 2017 (The Conway Bulletin) – Kurbanguly Berdymukhamedov won a presidential election in Turkmenistan with 97.7% of the vote, improving, even, on the 97.1% he won in 2012.

This is Mr Berdymukhamedov’s third presidential election victory in Turkmenistan. He has ruled since 2007 and this latest win gives him another seven years in power.

Critics have said that the election was fraudulent and that Mr Berdymukhamedov did not face any real opposition as the candidates running against him all supported his policies. Turkmenistan was officially a one- party state until 2012 when the first multi-party elections were first run. In essence, though, they have been show-elections with Mr Berdymukhamedov set up to win.

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(News report from Issue No. 317, published on Feb.17 2017)

Kazakhstan promises to prop up banks with $6.5b fund

ALMATY, FEB. 13 2017 (The Conway Bulletin) — The Kazakh government is preparing what would amount to a 2 trillion tenge ($6.5b) bailout of its banking sector only eight years after it was forced to buy up a handful of failing banks during the Global Financial Crisis of 2008/9.

The plan is a virtual admission that policies brought in by the Central Bank since the Global Finance Crisis have failed to prevent another banking meltdown.

The sharp economic downturn triggered by a collapse in oil price in mid-2014, has wiped out jobs, pressured inflation and knocked 50% off the value of the tenge. Despite being forced to increase their capital and pass Central Bank stress tests, the Kazakh banking sector has been hit badly and is now holding billions of dollars of bad debt.

Earlier this month, the IMF said that urgent action was needed to stave off another banking collapse. Now that warning appears to have been heeded by the Kazakh government after it announced the emergency plan.

In a statement on the finance ministry’s website, Bakhyt Sultanov, the finance minister, said that the government would pull in funds from the country’s oil wealth fund to plug the financial shortfall.

The Interfax news agency later reported by quoting the deputy governor of the Central Bank, Oleg Smolyakov, that the cash would be injected into the government’s Problem Loan Fund, through which it has been funnelling cash to banks.

The government has already doubled its loans to troubled banks to 400b tenge ($1.3b), half of which has been borrowed by Kazkommertsbank.

Kazkommertsbank bought the debt-laden BTA Bank in 2014/15 in a deal heavy with political undertones. It is now in talks with Halyk Bank, owned by President Nursultan Nazarbayev’s daughter Dinara and her husband Timur Kulibayev, to merge and create a banking giant.

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(News report from Issue No. 317, published on Feb.17 2017)

Bread prices rise in Kazakhstan

FEB. 14 2017 (The Conway Bulletin) — An informal study of bread prices by the ranking.kz website showed that prices have risen by 8-9% in the past year. This is important because the survey acts as a balance on official inflation data which has said that price rises have been more gentle. Economists have been predicting a jump in prices, linked to the devaluation of the tenge.

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(News report from Issue No. 317, published on Feb.17 2017)

Turkmenistan increases electricity production

FEB. 13 2017 (The Conway Bulletin) — Turkmenistan has increased its electricity production by 7.4% so far this year compared to the same period in 2016, media reported quoting government officials. This is important because Turkmenistan sees electricity as a second major export after gas and has been investing heavily in infrastructure. It has also said that it wants to export electricity along a route built adjacent to the TAPI pipeline that will pump gas to Pakistan and India. This will rival the World Bank-backed CASA-1000 electricity power line being built from Tajikistan and Kyrgyzstan.

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(News report from Issue No. 317, published on Feb.17 2017)

Uzbeks use Morgan Freeman to promote film

FEB. 11 2017 (The Conway Bulletin) — Uzbekistan’s cinema licensing agency blocked the release of an Uzbek-made action movie called ‘Rogue’ because posters advertising the film had shown an image of US actor Morgan Freeman, suggesting the he played a major role in it. He didn’t, as it happens, have any role in the movie which is hooked around the story of an Uzbek police chief fighting off assassins.

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(News report from Issue No. 317, published on Feb.17 2017)

Georgia Healthcare posts strong 2016 results

TBILISI, FEB. 16 2017 (The Conway Bulletin) — In its full year results, London-listed Georgia Healthcare said that revenue had risen by 75% and that the company was well- placed for more growth in 2017 and 2018.

The Tbilisi-based company, which is part-owned by Bank of Georgia, did say that results at its insurance business were worse than expected but this didn’t dampen investor enthusiasm for one of the Central Asia/South Caucasus region’s best- performing stocks.

The day after the results, Georgia Healthcare’s share price was up 6.3% at 379p (see Markets on page 12 for more information on Georgia Healthcare’s stock price).

Nikoloz Gamkrelidze, the Georgia Healthcare CEO, said in a statement that a combination of organic growth and acquisitions in the pharmacy and medicines distribution sectors had helped push up revenues to 426.4m lari ($161.5m) and to more than double net profit to 61.3m lari ($23.2m).

“The Group delivered a strong performance in 2016, and remains in good shape to benefit over the next few years from the combination of its position as the largest healthcare services provider, pharmaceuticals wholesaler and retailer and medical insurer in what continues to be a fast-growing, predominantly privately-owned, Georgian healthcare services market,” he said.

Georgia Healthcare listed on the London stock exchange in November 2015 for 170p. It is the largest private healthcare company in Georgia and now operates 13 regional clinics and 28 so-called express clinics. Acquisitions in 2016 in the competitive pharmacy sector has now given is a 29% share of this market.

The one blight on its 2016 results was in the insurance sector which lost 4.9m lari ($1.85m). Mr Gamkrelidze blamed a loss on one contract.

“Our medical insurance business had a more challenging year, particularly reflecting the loss- making impact of one large corporate insurance contract,” he said. “This contract has now expired and has not been renewed.”

Mr Gamkrelidze predicted that the Georgia Healthcare insurance unit will break even in 2017. It has a 35% share of Georgia’s medical insurance market.

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(News report from Issue No. 317, published on Feb.17 2017)