ANNUAL REPORT JUNE 2010
FEDERATION OF EURO-ASIAN STOCK EXCHANGES
KAZAKHSTAN STOCK EXCHANGE
KASE strives for fair and efficient market.
We work with the regulators to insure clear
and comprehensive market rules.
Kadyrzhan Damitov
President
The severe epoch of crisis seems to be ending
and the global exchange markets started to
feel a warm breeze of recovery. And although
the markets are still volatile, the global and
local regulators agree that the worst symptoms
of the global recession are already behind and
hopefully soon the global market will return to
its normal stage.
Due to Kazakhstan's integration into global
financial community Kazakhstan market
situation in 2009 was a reflection of global
trends. Tremendous collapses of the external
markets worsened the internal problems of the
domestic financial market. Under such shock
some companies were not able to withhold the
pressure and ended up leaving the market.
However, such "shock therapy" encouraged
mobilization of resources and elaboration of a
new and more effective concept of operation.
HISTORY AND DEVELOPMENT
Founded on November 17, 1993 Kazakhstan Stock
Exchange (KASE) is the only Stock Exchange in
Kazakhstan. It represents a universal financial
market with the following major sectors: foreign
currency, government securities, corporate
securities, repo and derivatives. KASE is a member
of the International Association of Exchanges of
the Commonwealth of Independent States, the
Federation of Euro-Asian Stock Exchanges, and in
2008 obtained an affiliate status at the World
Federation of Exchanges. It continues working
actively on establishment of bilateral and
multilateral relations with the foreign companies,
exchanges and international financial institutions.
KASE is regulated by the Agency for Regulation
and Supervision of Financial Markets and
Institutions, which among other responsibilities
executes the main functions of state control and
supervision of the security market. Creation of a
Regional Financial Center of Almaty (RFCA) in
2006 opened new opportunities for the Stock
Exchange and equity market as a whole.
Kazakhstan Stock Exchange was legally
determined as an operator of the special trade
floor of the Regional Financial Center of Almaty.
During the following year, Kazakhstan Stock
Exchange elaborated and adopted a new 2007-
2010 development strategy, obtained a status of a
commercial organization, adopted the Code of
Corporate Governance and began the process of
additional capitalization.
With 2008 global financial turmoil, KASE revised
some of its previous plans and postponed the
demutualization of its shares. The stock exchange
focused on other issues described in the
company’s Development Strategy. It completely
revised the structure of its web-site making it more
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In addition, growing commodity prices pushed
stock prices on KASE up. However, the market
was negatively affected by difficult situation in
local banking sector, and increasing number of
corporate defaults on the corporate debt
market, as well as decrease in a number of
market participants.
Regardless of this difficult situation on the
market Kazakhstan Stock Exchange entered
2010 with relatively small losses. The total
turnover in 2009 was over 155 billion (total
turnover for 2008 was 210.6 billion). Currency
market and repo market represent the greater
share of KASE turnover. As of January 1, 2010
we entitle 126 listed companies with 74 listed
shares and 89 listed bonds.
KASE strives for fair and efficient market. We
operate our own high capacity trading system
with full functionality for all financial
instruments. We work with the regulators to
insure clear and comprehensive market rules.
Currently, we provide access to 84 members
representing the entire financial sector of
Kazakhstan.
In the nearest future we plan to develop our
clearing and settlement system to have
a perfect T+N settlement cycle. We also plan
to introduce a risk-management system on the
REPO transactions market as the first step to
complete implementation of the more
comprehensive system. Currently, our real-time
market data is distributed by Bloomberg and
Reuters and we plan to extend such service
through other data vendors. We are seriously
aimed at obtaining full membership at WFE,
improve our market status in FTSE country
classification system and further develop
cooperation with foreign exchanges.
convenient for the users; introduced changes into
the trading system; revised the listing rules and
categories to reflect changes evolved from the
merger of the Main Trading Floor with the RFCA
Special Trading Floor. KASE introduced new
financial instruments and seriously considers
further diversification of the existing range of the
financial instruments and services offered by the
exchange to its clients. market safety, regain investor trust and attract
more market participants and issuers. In the
nearest future we plan to develop our clearing and
settlement system that fully responds to the needs
of the market participants. We also plan to
introduce a solid risk-management system on the
REPO transactions market as the first step to a
complete implementation of a more
comprehensive system.
The stock market in 2009 also reflected global
trends. While the first half of the year was rich with
events resulting from the global financial crisis –
depreciation of local currency, increasing number
of corporate defaults on the corporate debt
market; relative stabilization of the economy in
general and the financial market in particular
showed the first positive signs of recovery in the
second half of 2009. To respond to increased
uncertainly of the market environment, KASE
introduced a number of regulatory changes to
improve market stability and increase
transparency. Moreover, we are aimed at increasing transparency
of the market by promoting real-time data feed
through global market data vendors, participating
in index cooperation projects, further improving
the web-site of the stock exchange to make it
more user friendly and thus attracting more
users. Continuously striving for technological
advancement KASE plans to make an assessment
of a current state of its technologies and introduce
necessary developments that would result in better
efficiency and reliability.
FUTURE OUTLOOK
T he global financial crisis challenged market
infrastructure around the globe, revealed
weaknesses and pushed for changes. Entering
2010 Kazakhstan Stock Exchange Inc. (KASE) is
aimed at further strengthening of the market
stability and transparency. Improvement of services
provided by the exchange to the market
participants, launching new attractive markets and
developing business infrastructure will remain on
our agenda for a foreseeable future.
In 2010 KASE will focus on a post-crisis
developments taking into account lessons learned
from the crisis. KASE is determined to improve
KASE expects 2010 to be marked with the
occasion of launching a successful derivatives
market, which would be a challenging endeavor
given that in an after crisis environment most
investors returned to a more conservative
investment strategy. Nonetheless, Kazakhstani
market is ready for more attractive instruments and
we hope that derivatives market would be
welcomed by most market participants this year.
During the last couple of years KASE remained
quite active internationally and in 2010 it will
continue its work with the its peers, governmental
agencies and international organizations to
promote development and visibility of the
Kazakhstan financial market, as well as its
compliance with mutually recognized international
norms and standards.