AUG. 20 2015 (The Conway Bulletin) – Shares in Kazakh copper miner KAZ Minerals, formerly called Kazakhmys, rose by 20% on the London stock exchange immediately after Kazakhstan’s government said that it would allow its tenge currency to free-float. The announcement knocked 23% off the value of the tenge, giving exporters a much needed boost.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 244, published on Aug. 21 2015)
ALMATY/Kazakhstan, AUG. 21 2015 (The Conway Bulletin) — Kazakhstan gave up its defence of the tenge by ditching a peg to the US dollar which had cost it billions to enforce, a move that knocked 23% off the currency’s value .
Businesses, policy makers and analysts will now be watching for a subsequent rise in inflation, as well as possible social unrest, in Kazakhstan.
At a government meeting broadcast on national television, Kazakh President Nursultan Nazarbayev said that the depreciation of the Russian rouble and a sharp fall in oil prices in the past year meant that it was becoming far too costly to defend the tenge.
“Let us face it, this is a necessary measure, there was no other alternative. Crisis always brings about change,” he said.
This is a major policy shift for Kazakhstan which had been alone in the Central Asia and South Caucasus region in stubbornly defending its currency. Perhaps the sudden devaluation of the Chinese yuan earlier this month was the trigger for the Kazakh devaluation.
Kazakh exporters had been struggling as their products became more expensive.
The devaluation will also damage the reputation of the Central Bank and the tenge. This is its second devaluation in 18 months. Since February 2014, the tenge has lost 39% of its value.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 244, published on Aug. 21 2015)
AUG. 6 2015 (The Conway Bulletin) – Data from Georgia’s ministry of economy showed that the number of people flying between Tbilisi and Moscow had risen by three-quarters to around 143,000 people in the first seven of 2015 compared to the same period in 2014. Russia and Georgia have resumed direct air links, severed after a brief war in 2008.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 242, published on August 7 2015)
JUNE 30 2015 (The Conway Bulletin) – The Kazakh Central Bank bought a 10% stake in Kazmunaigas from the country’s sovereign wealth fund Samruk Kazyna for 750b tenge ($4b), a move analysts said was designed to help the state- owned energy company pay off debts generated by a sharp fall in oil prices.
This is the second reorganisation of Kazmunaigas since June. It earlier announced the sale of half its 16.8% stake in the Kashagan oil project to Samruk-Kazyna for $4.7b.
Analysts at Halyk Bank, a Kazakh bank, said the latest move shifted debt once again from Kazmunaigas to Samruk Kazyna to the Central Bank.
“If the first transaction raised the net debt of Samruk-Kazyna, the second lowered Samruk- Kazyna’s net debt, and the credit risk. By divesting of Kazmunaigas, Samruk-Kazyna reduced the most expensive part of its debt,” Halyk Finance senior analysts Sabit Khakimzhanov and Gulmariya Zhapakova said in a note to clients.
Delays at Kashagan and a sharp fall in oil prices have worsened Kazmunaigas’ financial affairs.
But, although unprecedented, the Central Bank’s purchase will change little in Kazakhstan’s oil sector. The two transactions may have helped Kazmunaigas achieve a better financial position in the short term, but both moves are temporary.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 242, published on Aug. 7 2015)
JULY 28 2015 (The Conway Bulletin) – Kyrgyzstan’s Central Bank cut its main interest rate to 8% from 9.5% because of a slowdown in inflation. The Central Bank said annualised inflation was now hovering around 6%, nearly half the level seen at the beginning of the year. Kyrgyzstan, like the rest of the region, has been coping with the fall out of a decline in the Russian economy.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 242, published on August 7 2015)
JULY 23 2015 (The Conway Bulletin) — For Kyrgyzstan, gold is its most important commodity, the Kumtor gold mine in the east of the country is its most important mine and Switzerland is its most important export market.
Last week, the government released data on trade turnover, which showed a marginal downturn, due mostly to the regional crisis triggered by the downfall of the rouble. A strong dollar and low oil prices have damaged the economic outlook for the whole region, especially for countries, like Kyrgyzstan, which rely heavily on foreign remittances. It was not a surprise to see trade shrink by 12% in January-May 2015, as compared to the same period last year.
An accurate data analysis, however, also told of another underlying story. Out of the eight major markets for Kyrgyz exports, the only two to grow were Switzerland (2.2 times larger than in 2014) and the British Virgin Islands (almost 4 times larger).
Centerra Gold, owners of the Kumtor gold mine, had a much better start in 2015 than it had in 2014 and trade with Switzerland, the main importer of Kyrgyz gold, was automatically boosted. Switzerland now accounts for 48% of Kyrgyz exports.
Kyrgyzstan is heavily betting on Switzerland to keep its cash flow steady. The one warning sign on the horizon is that gold has dipped to a 5-year low.
By Paolo Sorbello, Deputy Editor, The Conway Bulletin
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 241, published on July 23 2015)
JULY 20 2015 (The Conway Bulletin) – Lifting of international sanctions against Iran will give Kazakhstan’s steelmaking industry, and the ArcelorMittal plant at Temirtau in particular, a boost, Asset Isekeshev, Kazakh minister for industrial development, said.
ArcelorMittal Temirtau, near Karaganda, is one of the most important factories in Kazakhstan outside the oil and gas sector but it has struggled recently because of a drop in demand for steel from Iran.
“The lifting of sanctions against Iran could be a big plus for ArcelorMittal. This is a big market for us and this would allow us to stabilise operations,” Mr Isekeshev said at a press conference.
According to officials from ArcelorMittal Temirtau, Iran makes up around a third of its export market. Over the past few years, ArcelorMittal has tried to cut costs at the plant. It has laid-off thousands of workers and imposed salary cuts.
A new railway transport route from Kazakhstan, across Turkmenistan into Iran should also help ArcelorMittal exports.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 241, published on July 23 2015)
JULY 23 2015 (The Conway Bulletin) – Many Central Asian countries have pledged their support for a deal between Iran and Western countries over its nuclear programme that will allow sanctions to be lifted. The positive feeling is mutual. In April 2015, Iran’s Foreign Minister noted that there is “no ceiling for the expansion of relations with regional countries, whether in the Caucasus or in Central Asia”.
Central Asia and Iran have already been cooperating for some time.
December 2014 saw Europe via Iran the inauguration of the new Iran-Turkmenistan-Kazakhstan railroad, linking Central Asia to Iran’s southern ports. Iran has oil swap deals with both countries.
Turkmenistan also has gas pipelines running to Iran and in 2010 Iran sent equipment to Tajikistan for the construction of the Sangtuda-2 hydro- power plant.
Increased formal, and more flexible, cooperation will certainly benefit Central Asia. Iran will give Central Asia greater access to Middle Eastern and European markets. The energy export potential is attractive, particularly given that last year Russia said it would stop buying Central Asian gas, and Turkmenistan recently accused Gazprom of failing to pay debts. Supplying Europe with gas via Iran may be more feasible for Turkmenistan. The opening up of Iran also provides another legitimate partner in the region to counterbalance Russian and Chinese dominance, as is a key aim of the region’s “multi-vector foreign policy”.
However, it will also produce new competition in the region. In August 2014, before any nuclear deal was signed, Iran announced it would no longer import gas from Turkmenistan, instead building up domestic production. Having been excluded from markets for so long, Iran will want to build up its own trade partners rather than act as a transit country for Central Asia. Moreover, more Iranian oil on the market may cause a drop in oil prices, impacting Kazakhstan at already difficult times.
One thing is certain — new transport and energy infrastructure will need to be built for any Iranian reintegration to take place. China will no doubt be looking with interest at the opportunities this presents.
By Sarah Lain, Research Fellow at the Royal United Services Institute in London
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 241, published on July 23 2015)
JULY 17 2015 (The Conway Bulletin) – Georgia’s parliament passed a final reading of a bill that strips supervision of the country’s commercial banking sector from the Central Bank. The World Bank had urged the government to drop the bill. President Giorgi Margvelashvili now has to sign the bill into law although he has said he may veto it.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 241, published on July 23 2015)
JULY 23 2015 (The Conway Bulletin) – Shavkat Mirziyoyev, Uzbekistan’s PM, said GDP grew by 8.1% in the first half of 2015, compared to 2014. Given the secretive nature of the country, Uzbekistan’s official statistics have to be treated with skepticism.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 241, published on July 23 2015)
