Tag Archives: Kazakhstan

Kazakhstan’s Kazkom posts $231m loss

AUG. 28 2015 (The Conway Bulletin) – Kazkommertsbank, one of the largest banks in Kazakhstan, posted a net loss of almost 55b tenge ($231m) in the first half of 2015, due to costs associated with bad loans inherited from the takeover of troubled BTA bank.

Kazkommertsbank had to sell assets to guarantee provisions for its non-performing loans (NPL) portfolio, which increased after the takeover of BTA earlier this year. Analysts said at the time of the merger that political, rather than business, reasons had driven the Kazkommertsbank’s takeover of BTA Bank.

The latest earnings results follow a 55% fall in net profit in 2014, a drop also associated with the takeover of BTA Bank. Sabina Amangeldi, senior analyst at Halyk Finance, said that the high non-performing loan (NPL) ratio in Kazkommertsbank’s portfolio would continue to weigh on its earnings potential.

“NPL share and cost of risk, remain high and earnings quality is still low,” she wrote in a note.

NPLs now account for 14.5% of Kazkommertsbank’s loan portfolio.

Ms Amangeldi also highlighted the weak tenge as a potential problem for Kazkommertsbank, an issue that the bank also pointed out.

Kazkommertsbank said the impact of the Central Bank’s decision at the end of last month to remove the tenge from its US dollar peg was still unclear.

“At the present time it is impossible to determine the impact of [the new monetary policy] on the Kazakhstan economy and the banking system,” it said.

The value of the tenge collapsed by 23% after the dollar peg was withdrawn in August, the second major devaluation in the value of the Kazakh currency since Feb. 2014.

ENDS

(News report from Issue No. 246, published on Sept. 4 2015)

China and Kazakhstan sign railway deals

SEPT. 1 2015 (The Conway Bulletin) – Askar Mamin, head of Kazakhstan Temir Zholy, the state-owned railway company, and Li Xueyong, the governor of the Jiangsu province in China’s far east, signed a series of documents that included an extra $600m investment in the development of the Khorgos special economic zone on the China-Kazakhstan border. Kazakhstan and China are spending billions on developing Khorgos, although a corruption scandal has slowed progress on the Kazakh side.

ENDS

(News report from Issue No. 246, published on Sept. 4 2015)

Petrol price controls cut in Kazakhstan

SEPT. 4 2015 (The Conway Bulletin) – The Kazakh government said that it was abandoning price controls on petrol. Heavy fluctuations in currency and oil prices have put these price controls under pressure.

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(News report from Issue No. 246, published on Sept. 4 2015)

Water tax to affect Kazakh soft drinks industry

AUG. 28 2015 (The Conway Bulletin) – The Kazakh State Revenue Committee plans to introduce a new tax on the use of underground water, a levy soft drinks manufacturers said will make production unprofitable. The new tax of 1,982 tenge ($8) per cubic metre of extracted water is a 200-fold increase on the previous tax, Aliya Mamytbayeva, director of the Association of Soft Drink Manufacturers, told vlast.kz.

ENDS

(News report from Issue No. 246, published on Sept. 4 2015)

Central Asian leaders head to Beijing

SEPT. 1/3 2015 (The Conway Bulletin) – Highlighting just how important China has become to Central Asia, four out of five of the region’s leaders travelled to Beijing to watch a military parade designed to mark the 70th anniversary of China’s victory over Japan in World War II.

Trips to Beijing have become a regular part of the diplomatic land- scape for the presidents of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. China now regards the region almost as its personal backyard, seemingly striking bilateral deals and agreements through the Shanghai Cooperation OrganisatPion (SCO) at will.

And this week appears to have been no different. Kazakh President Nursultan Nazarbayev flew to Beijing a few days early to sign off on a handful of deals. On his website, akorda.kz, Mr Nazarbayev said that the deals, spanning a range of sectors, had been worth $23b.

“We have actively cooperated with China for more than 20 years, mainly in the energy sector and in extracting other raw materials,” he said.

“Yesterday during our constructive talks with President Xi Jinping we agreed to create 45 joint facilities, and agreements were signed on 25 of them worth a total of $23b.”

The details of these deals were vague but they covered a range of sectors from tourism to hydropower.

Mr Nazarbayev also congratulated Chinese President Xi on winning the 2022 Winter Olympic Games for Beijing in July ahead of Almaty.

Following on a few days behind him were the presidents of Kyrgyzstan, Tajikistan and Uzbekistan. Only Kurbanguly Berdymukhamedov, Turkmenistan’s president, was missing. Also present were other leaders from neighbouring countries including Russia’s Vladimir Putin and South Korea’s Park Geun-hye.

With an economic downturn linked to Russia and a collapse in the price of oil, China has become an even more important driver of economic development in Central Asia and the SouthCaucasus.

At the end of last month, Kyrgyzstan officially opened a new power line funded by China that will improve electricity transit from the south of the country, where its hydro- power stations are sited, to the north and when Uzbekistan’s president Islam Karimov flew into Beijing its official media said bilateral trade had tripled in six years to around $5b.

ENDS

(News report from Issue No. 246, published on Sept. 4 2015)

Kazakh football team qualifies for UEFA Champions League

AUG. 26 2015 (The Conway Bulletin) – FC Astana became the first Kazakh football team to qualify for the group stages of the UEFA Champions League by beating the more fancied Apoel Nicosia 2-1 on aggregate during a two-leg qualifying match. FC Astana scored with 6 minutes remaining of normal time in the second match in Nicosia.

ENDS

(News report from Issue No. 245, published on Aug. 28 2015)

Kazakhstan to host nuclear fuel bank

AUG. 27 2015 (The Conway Bulletin) – The International Atomic Energy Agency (IAEA) signed a deal with the Kazakh government to host the first internationally-controlled bank of low-enriched uranium, an agreement that will boost Kazakhstan’s global stature. The idea is that countries can ask to tap into the supply for fuel for their power stations and prevent any unilateral nuclear build up.

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(News report from Issue No. 245, published on Aug. 28 2015)

Sinopoec and Lukoil complete Kazakh deal

AUG. 20/21 2015 (The Conway Bulletin) – China’s state-linked Sinopec agreed to buy the half of Kazakhstan-based Caspian Investments Resources (CIR) for $1.09b that it didn’t already own from Russia’s Lukoil, media reported. The price is lower than the $1.2b initially struck in 2014 and reflects the lower oil price. CIR used to be called Nelson Resources.

ENDS

(News report from Issue No. 245, published on Aug. 28 2015)

Kazakh shares rally after devaluation

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

(News report from Issue No. 244, published on Aug. 21 2015)

Kazakhstan devalues the tenge by 23%

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

(News report from Issue No. 244, published on Aug. 21 2015)