the attractiveness of the kazakhstan market · kazakhstan’s stock market: significant catch-up...

The attractiveness of the Kazakhstan market

Kazakhstan: 9th largest country in the world

2

A territory bigger than Western Europe

Bordering on China and Russia

World’s 9th largest country

Looking back: how the country has changed since independence

Since 1991: market-oriented economic reforms, price and trade liberalization, investor-friendly tax and legal environment

Ambitious privatization program: cash sales, voucher schemes and asset sales

1998: pension reform resulting in a well-capitalized private pension funds system

2000: first former Soviet republic to fully repay the IMF (7 years ahead of schedule)

2002: first country in the CIS to receive an investment grade credit rating

Wave of international IPOs from 2005, driven by the mining sector and listings in UK

3

Snapshot on Kazakhstan

4

Strategically positioned with stable social-

political environment

2.7m sq. km, the world’s 9th largest country Politically stable Good relationships with China, Russia, EU and the US

Successful macroeconomic policies – most

reformed economy in CIS

S&P rating BBB, Moody’s Baa2 High GDP growth rate; growing middle class Well established “Chilean style” private pension sector Developed banking sector, fully convertible currency Liberal taxation regime No restrictions on foreign investors

Human capital Virtually 100% literacy rate Ethnically diverse with Kazakh (63%), Russian (24%),

others (13%)

Real GDP: 1991-2010

5

-

25

50

75

100

125

150

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

CAGR +7%

-

25

50

75

100

125

150

1991

1992

1993

1994

1995

CAGR -9%

US$ bn, constant

-

0

0

0

0

1

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

0%

10%

20%

30%

40%

50%19

91

1992

1993

1994

1995

Inflation (CPI)

6

hyperinflation

Exchange rate

7

110

130

150

170

190

210

230

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

110

130

150

170

190

210

230

KZT / EUR KZT / USD

Real Effective Exchange Rate

8

80

90

100

110

120

130

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Index 2000 = 100

Trade and current account balance

9

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

% of GDP

Current account

Trade

Public deficit, public debt

10

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2002

2003

2004

2005

2006

2007

2008

2009

2010

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

% of GDP

Public deficit

Public debt

Consumer spending

11

US$bn

-

10

20

30

40

50

60

70

2005

2006

2007

2008

2009

2010

Unemployment

12

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

2003

2004

2005

2006

2007

2008

2009

2010

Kazakhstan: successful adaptation to the financial crisis

Quick reaction to worsening market conditions from the end of 2008 Successful debt restructuring at 3 of the 4 lenders that defaulted in 2009 Gradual decrease of Non Performing Loans since 2009

Strong position to face the global financial crisis Robust GDP growth (+7.1% y-o-y in H1 2011) Significant cash reserves (US$70bn foreign reserves) Limited budget deficit: 2.5% in 2012 and 1.5% in 2013 Low government debt

On-going reforms and policy trends Sustained focus on production of energy and mineral products Economic diversification through investments in infrastructure and training and

promotion of agricultural production Financial stability and improvement of the banking sector’s regulation Managed float of Tenge since 2011 with control of the currency appreciation

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Kazakhstan: a special case among Central Asian countries

14

Kazakhstan Uzbekistan Turkmenistan Tajikistan Kyrgyzstan

146

39

18

6 5

Kazakhstan Turkmenistan Uzbekistan Kyrgyzstan Tajikistan

9 268

3 560

1 411865 820

8% 7% 7% 4% 8%

CAGR 2000-2010 Real GDP

Uzbekistan Kazakhstan Tajikistan Kyrgyzstan Turkmenistan

27

16

7 5 5

Population (2010, in millions)

Nominal GDP (2010, in billions)

Nominal GDP per capita (2010, in USD)

-

2%

4%

6%

8%

10%

12%

14%

(2.5%) 0% 2.5% 5.0% 7.5% 10.0%

Kazakhstan peer group comparison (BBB- to BBB+ rated countries)

15

Net FDI (% of GDP) for the full year 2010Real GDP growth – compounded annual growth rate 2008-2013

Net

FD

I (%

of G

DP)

Real GDP growth (%)

Russia

Kazakhstan

Brazil

Hungary

India

Portugal

Thailand

Mexico

South Africa

One of the most attractive countries compared to peers

Bahrain

Most elements from the Periodic Table

16

H

Li

Na

K

Rb

Cs

Fr

Be

Mg

Ca

Sr

Ba

Ra

Sc

Y

La

Ce

Ti

Zr

Hf

Unq

V

Nb

Ta

Unp

Cr

Mo

W

Unh

Mn

Tc

Re

Uns

Fe

Ru

Os

Uno

Co

Rh

Ir

Une

Ni

Pd

Pt

Unn

Cu

Ag

Au

Zn

Cd

Hg

Ga

In

Ti

Al

B

Ge

Sn

Pb

Si

C

As

Sb

Bi

P

N

Se

Te

Po

S

O

Br

I

At

Cl

F

Kr

Xe

Rn

Ar

Ne

He

Th Pa U Np Pu Am Cm Bk Cf Es Fm Md No Lr

Pr Nd Pm Sm Eu Gd Dy Ho Er Tm Yb Lu

Ac

Most important for industrial use

Present in Kazakhstan soil

Tb

Abundant natural resources

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Oil Gas Uranium Gold Bauxite Copper

Oil: 3% of world reserves (39.8 bn barrels), 1.8 mbpd in 2010 (2.1% of world oil production)

Gas: 1% of world’s reserves, and production of 33.6 bcm in 2010 (3.3% of world gas production)

Uranium: world’s #1 producer with production of 17.8 kt in 2010 (33% of world’s production)

Metals: (coal, iron ore, gold, copper, zinc and lead) – second largest producer in the CIS after Russia

Grain: 5.8% of global exports in 2009/10 (world #7)

Kuwait Iraq Venezuela United ArabEmirates

Iran Libya Saudi Arabia Kazakhstan Qatar Nigeria Gabon Sudan Ecuador Vietnam India

9488

77 7262

45 42 41 38 34 33 30

18

R/P – Number of years to produce known reserves at current production rates

TOP 15 countries represent 92% of world reserves

> 100 years

SaudiArabia

Iran Iraq Kuwait Venezuela United ArabEmirates

Russia Libya Kazakhstan Nigeria Canada Qatar USA China Brazil

262

138115

104 99 9860

44 40 3725 20 20 13

Bn barrels

32

A major oil producer

#9 proven reserves (3%)

#8 reserves to prod. (62 years)

Proven reserves – TOP 15 countries

Reserves to production

19

At par with the largest natural resources producers

OIL

URANIUM

IRON ORE

NATURAL GAS

ZINC

COAL

-

1

2

3

4

-1020304050

Kazakhstan

Australia

Canada

-

5

10

15

20

-

500

1 000

1 500

2 000

-50

100150200250

-

1 000

2 000

3 000

4 000

-

500

1 000

1 500

2 000

-

20

40

60

-100200300400500

-20406080

100

-100200300400500

-1020304050

Production (mbl/day)

Production (kt)

Production (mt)

Production (bn cum)

Production (kt)

Production (mt)

Reserves (bbl)

Reserves (kt)

Reserves (bn t)

Reserves (bn cum)

Reserves (mt)

Reserves (bn t)

26th 14th 19th4th

4th 8th

18th 6th29th 9th 11th (1)28th

2nd 3rd1st1st 2nd3rd

21th 11th

7th 5st3rd 3rd

10th 13th4th 8th 12th4th11th 9th2nd 6th 9th2nd

(1) Excluding Canadian Oil Sands

A strategic location to control O&G flows thanks to strong infrastructure

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RUSSIAN FEDERATION

CHINAKYRGYZSTAN

UZBEKISTAN

TURKMENISTAN

CASPIAN

SEA

“Central Asia – Center”820 m cum / day

“Orenburg-Novopskov”170 m cum / day

“Bukhara-Ural”400 m cum / day

“BGR – TBA”36 m cum / day

“Caspian Pipeline Consortium”35 m t / year

“Atyrau-Samara”15 m t / year

“Atyrau-Samara”15 m t / year

“Atasu-Alashankou”10 m t / year

RailroadOil pipelineGas pipeline

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Growing importance of Asia as a commercial partner

China10%

Rest of Asia4%

EU2723%

Russia14%

Rest of the World49%

China17%

Rest of Asia3%

EU2728%


Russia7%

2004 2010

2004 2010Rest of Asia

3% China19%

EU2713%

Russia22%


China6%

EU2721%

Rest of Asia7%


Russia37%

2000

2000

EU2718%

China3%

Rest of Asia6%

Russia49%


Rest of Asia4% China

8%

EU2726%

Russia21%


Export by country

Import by country

Regional positioning: between China and Russia

22

% of total Import % of total Export

China

Russia

0%

10%

20%

30%

40%

50%

60%20

00

2002

2004

2006

2008

2010

0%

5%

10%

15%

20%

25%

30%

2000

2002

2004

2006

2008

2010

China/Asia, gaining importance as commercial partner

Clear acceleration of commercial exchanges between Kazakhstan and China over the last decade

23

Strengthening of relationships

China expected to continue investments in the energy or metals & mining sector…

…while diversifying in non-extractive industries

Strong potential for further increase of investment flows with China Willingness to diversify Kazakhstan’s export routes

Development of gas transport routes

2010/2011: signing of several agreements between Kazakhstan and China including renewable energy, gas pipeline, civil nuclear projects…

28,8%

2010

Kazakhstan’s stock market: significant catch-up potential

24

31,1%

87,1%

2001 2010

31,3%

68,5%

2003 2010

25,9%

64,2%

2004 2010

28,5%

51,0%

2004 2010

Domestic market capitalisation over GDP (%)

2.8x 2.2x 2.5x 1.8x

2001 2010 2003 2010 2004 2010 2004 2010

2010 Soon

Thailand China Russia Indonesia

Kazakhstan

Top 20 Kazakh companies by market capitalization

25

(1) Merged with KazakhGold in 2011

in $m Market Cap. Sector KAZE LSE AIMEurasian Natural resources Corp. 11 011 Metals & Mining KazMunaiGas EP 6 832 Energy Kazakhmys 6 507 Metals & Mining Halyk Savings Bank 2 151 Financials Kazkommertsbank 1 521 Financials Kazakhtelecom 1 385 Telecom ATFBank 1 354 Financials Mangistau Electricity Distribution Network 1 251 Energy Mangistaumunaigaz 807 Energy Zhaikmunai 667 Energy Nurbank 575 Financials SAT & Company 564 Metals & Mining Kaspi Bank 459 Financials Bank Centercredit 389 Financials Ust-Kamenogorsk Poultry Plant 362 Consumer goods Max Petroleum 196 Energy Kant 183 Consumer goods

Polyus Gold International (1) 184 Metals & Mining KMK Munai 173 Chemicals Temirbank 151 Financials

Concluding remarks: what next?

Potential for further GDP growth

Clear opportunities for institutional investors

Asia consolidates its position as prime market for Kazakhstan

Continuation of privatization programs: People’s IPO

Equity raising on domestic and international stock markets

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"Over the past 12 months the Government of Kazakhstan implemented a number of measures on the ease of doing business. These results showed the Government's commitment to improving business environment, including business registration, building permits, investor protection. But the most impressive is that Kazakhstan has managed to conduct such reforms during the economic crisis.”

World Bank Regional Director for Central Asia Motu Konishi, November 10

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the attractiveness of the kazakhstan market · kazakhstan’s stock market: significant catch-up...

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