ANNUAL REPORT JUNE 2010
FEDERATION OF EURO-ASIAN STOCK EXCHANGES
KAZAKHSTAN STOCK EXCHANGE
ECONOMIC AND POLITICAL DEVELOPMENTS
Economic and Political Environment
Political climate in Kazakhstan remains stable.
2010 is the year of Kazakhstan chairmanship
in the Organization for Security and Co-
operation in Europe (OSCE). This puts more
emphasis on the importance of internal
political stability to ensure successful
implementation of the country's foreign policy
and Kazakhstan's OSCE agenda for 2010
which among other things includes: conflict
management measures in Nagorny Karabakh,
recovery of Afghanistan, as well as fight
against drug-trafficking. Greece and Finland
joined Kazakhstan in the Troika of Chairmen of
the OSCE. Global political experts believe that
Kazakhstan’s chairmanship will bring “fresh
air” to the organization and hope for positive
changes in the international political climate.
Kazakhstan continues its path towards
democracy. To guarantee proper functioning
of democratic processes in the country thirty
legislative amendments were approved.
During the next elections of the Lower House
of Parliament of Kazakhstan which will take
place in 2011, the amended legislation will
apply. The amendments simplify the process
of registration of foreign observers of the
elections process. Freedom of access to
information is also thoroughly assessed and in
the future sittings some tangible changes are
expected. The National Human Rights Action
Plan 2009-2012 furthers democratization of
the country. By adopting this Plan Kazakhstan
emphasizes its commitment to human rights
and a stable democratic society.
By improving domestic political stability the
Government of Kazakhstan emphasizes the
importance of positive investment climate that
eliminates potential political risks. In 2009 the
government reviewed and revised its
legislation and improved its rating in the World
Bank Doing Business rating creating better
conditions for foreign and domestic investors.
The year of 2010 is when the development of
the Customs Union with Russia and Belarus is
coming into force. The Union allows free
capital movement and opens new markets to
foreign and local corporations and investors.
The country requires resources for sustainable
development and therefore attraction of
foreign resources is one of the public policy
priorities.
Economic Performance
Despite of forecasts in 2009 Kazakhstan
Gross Domestic Product (GDP) grew by 1.2%
and amounted to KZT15.9 trln (US$107.3 bn)
and turned out to be higher than the
government GDP growth prediction of 1%.
At the same time the International Monetary
Fund (IMF) forecasted decline of Kazakhstan
GDP by 2%. In 2009 the industrial production
volume grew by 1.7%.
Among significant reasons that positively
influenced the economy growth in 2009 were
implementation of the large-scale government
programs in the banking sector along with
small and medium size businesses, and real
estate sector support. In order to carry out the
program of financial sector stabilization the
National Welfare Fund “Samruk-Kazyna”
acquired control of two major banks in
February.
As a result of price reduction on the main
export products of Kazakhstan in the second
half of 2008, the export operations volume at
the beginning of 2009 considerably declined.
In order to support the US dollar rate stability,
the National Bank actively intervened in the
currency market that resulted in decrease of
the gold and foreign currency reserves volume
by more than 10% by February from the
beginning of the year.
Consequently the National Bank devaluated
the local currency Tenge by 25% on February
5 and set the currency rate at KZT150 per US
dollar +/- 3%, along with the Russian ruble
devaluation of 56%. As a result the net
international reserves (NIR) grew by 1.7% and
amounted to US$47.6 bn by the end of the
year. In spite of the growth of prices on
imported goods the inflation in Kazakhstan
reached 6.2% in 2009, compared with 9.5% in
2008.
According to Kazakhstan government
forecasts the economy of Kazakhstan will
continue its recovery in 2010. The forecasted
growth of GDP is in the range of 1.5-2.0%
range, and the inflation rate of 6 - 8%. At the
same time the targeted currency rate for 2010
is set around KZT150 per US dollar with the
possible strengthening trend.*
* Information provided by KSE.
Regardless of the defaults of the most
troubled banks in the first half of 2009, the
government measures aimed at the economic
and financial sectors stimulation resulted in
relative stabilization in the banking sector in
the second half of the year.
Key Information Contacts
Financial Institutions’ Association of Kazakhstan www.afk.kz/eng/
National Bank of Kazakhstan www.nationalbank.kz
Ministry of Finance of the Republic of Kazakhstan www.minfin.kz
Central Securities Depository www.csd.kz
Kazakhstan Agency for Financial Market and Financial Organizations Regulation and Supervision www.afn.kz
REAL GDP
(US$ billions)
INFLATION (CHANGE PA; AV)
(%)
140 20
120 18
100 16
80 14
60 12
40 10
20 8
0
6
2005
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