introducing the kazakhstan stock exchange (kase) relevant as at march 1, 2008

INTRODUCING THE KAZAKHSTANSTOCK EXCHANGE (KASE)

Relevant as at March 1, 2008

COEVAL WITH TENGE …

KASE was established on November 17, 1993 under the name of Kazakh Interbank Currency Exchange – two days after Tenge (the new national currency of Kazakhstan) was introduced on November 15, 1993.

Nowadays, November 15 is celebrated as the official "Day of Tenge".

"New" tenge (since 2006)

"Old" tenge (1993–2006)

YOUNG AND SINGLE …

KASE is a commercial joint-stock company with 69 shareholders (as of January 31, 2008). The National Bank of the Republic of Kazakhstan is the largest shareholder. Other shareholders include: banks, brokerage firms, asset management companies, pension funds and other professional financial institutions.

Voting method: one share – one vote.

YOUNG AND SINGLE … (2)

Today KASE is the single universal financial exchange in Kazakhstan with brief but bright history:

1993 – first trades with foreign currency (US dollars)

1995 – first trades with T-bills

1996 – first trades with derivatives (KZT/USD exchange rate futures)

1997 – first trades with listed shares

1997 – first trades with state blocks of shares

1997 – first trades with non-listed corporate securities

1998 – launching of "nego" deals system on KASE (instead of over-the-counter securities market )


1998 – first trades with eurobonds of Kazakhstan

1999 – first trades with listed corporate bonds1999 – first trades with municipal bonds (since 2005 the issuance of these bonds is prohibited)

1999 – launching of the "nego" repo market

2001 – first trades with bonds of international financial organizations (IFO)2001 – launching of "automatic" repo market (the most massive and active sector of the KASE market)

2002 – first trades with promissory notes2003 – first trades with foreign T-bills (Russia 2028 & Russia 2030 )


2006 – first trades with foreign corporate bonds (JP Morgan and Merrill Lynch)

2006 – IPO of KazMunayGas Exploration and Production shares with the use of KASE settlement system

2006 – secondary distribution of KAZAKHMYS PLC (UK) shares with the use of KASE settlement system

2007 – special trading floor of the Regional Financial Center of Almaty city was founded on the base of KASE (founded to attract foreign issuers and investors)

2007 – launch of the new index on the share market – KASE Index, which continued the number series of KASE_Shares Index

2007 – commercialization of KASE

IMPRESSIVE DYNAMICS …

0

50

100

150

200

250

300

350

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 01.03.08

Other

Repo

Corporate securities

Public securities

Derivatives

Currencies169.3USD bn

322.5USD bn

38.1USD bn

0

50

100

150

200

250

300

350

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 01.03.08

Other

Repo

Corporate securities

Public securities

Derivatives

Currencies169.3USD bn

322.5USD bn

38.1USD bn

IMPRESSIVE DYNAMICS … (2)

0

50

100

150

200

250

300

350

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 01.03.08

0

50

100

150

200

250

300

350

KASE, USD bn

% to GDP

GDP, USD bn

308.6%

169.3USD bn

322.5USD bn

20.5USD bn

0

50

100

150

200

250

300

350

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 01.03.08

0

50

100

150

200

250

300

350

KASE, USD bn

% to GDP

GDP, USD bn

308.6%

169.3USD bn

322.5USD bn

20.5USD bn

UNIVERSAL EXCHANGE …

Repo (money) market constitutes for 68.4% of total KASE turnover

12,0%

4,3%

2,6%51,4%

27,0%

Direct repo with corporate securities, 1,655.3 USD m

Autorepo with public securities,

19,563.6 USD m

Corporate securities,757.0 USD m (2.0%)

Public securities,1,001.3 USD m

Autorepo with corporate securities, 4,567.8 USD mDirect repo with public securities,

229.6 USD m (0.6%)

Currencies,10,277.5 USD m

2 m 2008:

38,054.9USD m

Out of the scheme:STF RFCA,

2.9 USD m (0.01%)

12,0%

4,3%

2,6%51,4%

27,0%

Direct repo with corporate securities, 1,655.3 USD m

Autorepo with public securities,

19,563.6 USD m

Corporate securities,757.0 USD m (2.0%)

Public securities,1,001.3 USD m

Autorepo with corporate securities, 4,567.8 USD mDirect repo with public securities,

229.6 USD m (0.6%)

Currencies,10,277.5 USD m

2 m 2008:

38,054.9USD m

Out of the scheme:STF RFCA,

2.9 USD m (0.01%)

KASE serves the markets of: "nego" and "automatic" repo with public and corporate

securities foreign currencies (US dollar, euro, russian rouble)public securities of Kazakhstan issued by the National Bank,

municipalities and Ministry of Finance (including international bonds of Kazakhstan)

IFO bonds and foreign T-billspromissory notesequities corporate bonds …

UNIVERSAL EXCHANGE … (2)

"regular" domestic bonds (nominated in Tenge or foreign currencies, with discount or coupon, with fixed or floating coupon)

international bonds of Kazakhstani issuersagency bonds (with the tax regime equal to the tax regime of

T-bills) infrastructural bonds (secured by the government guarantee)bonds of foreign issuers (previously registered outside

Kazakhstan) soon: bonds of foreign issuers (registered in Kazakhstan)

VARIETY OF CORPORATE BONDS

DOMINATION OF REPO AND FOREX MARKETS

KASE repo market is specially designed for domestic purposes – to satisfy the needs of local pension funds and banks in short-term money borrowing and lending.

KASE foreign currencies market – the basic trading site for the National Bank of the Republic of Kazakhstan to regulate the exchange rate of Tenge.

KZT/USD: the KASE exchange rate today = official exchange rate tomorrow.

LISTED COMPANIES (by categories)

9 8 8 1220

27 3038 39 40

7 9 1313

20

2732

31 31 31

1999 2000 2001 2002 2003 2004 2005 2006 2007 Feb

2008

Category "A"Category "B"

Shares

6 11 6 717

28 2920

3034 39

49

61

62 62

21

10

1

1999 2000 2001 2002 2003 2004 2005 2006 2007 Feb

2008


Corporate bonds

9 8 8 1220

27 3038 39 40

7 9 1313

20

2732

31 31 31

1999 2000 2001 2002 2003 2004 2005 2006 2007 Feb

2008


Shares

6 11 6 717

28 2920

3034 39

49

61

62 62

21

10

1

1999 2000 2001 2002 2003 2004 2005 2006 2007 Feb

2008


Corporate bonds

LISTED COMPANIES (in total)

17 2332

4968

7994

114126 133

1999 2000 2001 2002 2003 2004 2005 2006 2007 Feb

2008

TOTAL

17 1721

54

626869

25

40

68

91

89

1

78

564545

36

1122

1999 2000 2001 2002 2003 2004 2005 2006 2007 Feb

2008

Shares

Corporate bonds

17 2332

4968

7994

114126 133

1999 2000 2001 2002 2003 2004 2005 2006 2007 Feb

2008

TOTAL

17 1721

54

626869

25

40

68

91

89

1

78

564545

36

1122

1999 2000 2001 2002 2003 2004 2005 2006 2007 Feb

2008

Shares

Corporate bonds

MARKET CAPITALIZATION (USD bln)

0

10

20

30

40

50

60

70

2001 2002 2003 2004 2005 2006 2007 2008

Shares

0

2

4

6

8

10

12

14

16

2001 2002 2003 2004 2005 2006 2007 2008

Corporate bonds

as of February 29, 2008 –55.8 bn USD


0

10

20

30

40

50

60

70

2001 2002 2003 2004 2005 2006 2007 2008

Shares

0

2

4

6

8

10

12

14

16

2001 2002 2003 2004 2005 2006 2007 2008

Corporate bonds



LISTED COMPANIES (by structure)

Global Industry Classification Standard (GICS) of S&P is used

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 Feb

2008

Energy/powerengineeringFinance

TelecommunicationservicesRaw materials sector

Industry

Main consumer sector

Public sector

Information technology

Health protection

Discretionary consumersector

Shares

2000 2001 2002 2003 2004 2005 2006 2007 Feb

2008

Corporate bonds

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 Feb

2008

Energy/powerengineeringFinance

TelecommunicationservicesRaw materials sector

Industry

Main consumer sector

Public sector

Information technology

Health protection

Discretionary consumersector

Shares

2000 2001 2002 2003 2004 2005 2006 2007 Feb

2008

Corporate bonds

"PURE" CORPORATE SECURITIES MARKET

Total KASE turnover for 2 months of 2008 with shares – 431.1 USD m,with corporate bonds – 291.0 USD m

0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

9,0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Feb 2008

Corporate bonds

Shares

Turn

over

, USD

bn

"PURE" CORPORATE SECURITIES MARKET (2)

In 2008 average daily KASE turnover with shares – 10.5 USD m,with corporate bonds – 7.1 USD m

0

20

40

60

80

100

120

140

160

2004 2005 2006 2007 2008

SharesCorporate bonds

Daily

turn

over

, USD

m

"PURE" CORPORATE SECURITIES MARKET (3)

The main problems are:• lack of free-float equities (the heritage of case-by-case

privatization)• conservative policy of main domestic investors ("buy bonds

and hold till maturity")

Nevertheless ..

CHAMPION GROWTH (in 2005–2007)

2 701,84

(29.02.08)

2 856

(19.07.07)

2 387

(20.08.07)

1 722

(30.10.06)

2 808

(12.02.07)2 394

(19.04.06)

1 642

(18.05.06)

0

500

1000

1500

2000

2500

3000

01

.01

.05

01

.04

.05

01

.07

.05

01

.10

.05

01

.01

.06

01

.04

.06

01

.07

.06

01

.10

.06

01

.01

.07

01

.04

.07

01

.07

.07

01

.10

.07

01

.01

.08

0

50

100

150

200

250

300

KASE Index

Shares volume,m USD

2,1951,193 1,074

216

(05.01.05)

Institutional investors assets at the end of 2007 reached 108.5 bn USD, 88.3% of them are banks assets,8.8% – pension assets

Principal indicator is growth of unit investment funds assets (at the end of 2006 – 422 m USD)

INVESTOR BASE …

0

20

40

60

80

100

120

140

160

180

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

0

20

40

60

80

100

120

Unit investment funds assets

Insurance assets

Pension assets

Banks assets

Total assets, % to GDP

GDP

KASE uses it’s own trading platform:on-screen based electronic "Server – Client" system remote accesselectronic signature and electronic documents circulation traffic encryptionon-line data saving

Central Depository is the KASE subsidiary:DVPT+0 settlement basis

ADVANCED TECHNOLOGIES

IN THE FUTURE …

• Waiting for IPO of the largest Kazakhstan banks and producers (according to the Securities Law, at least 20% of the local shares being placed must be suggested at the domestic market for purchase)

• Administrating the Special trading site of the Almaty Regional Financial Center (set-up to attract foreign issuers and investors)

• Welcoming the new listing companies• Waiting for IFOs to place their bonds in Kazakhstan• Ready to introduce T+n settlement basis for the foreign operators (only for

eqities)

• Launching currency swap market• Listing unit funds units• Holding active marketing campaigns• Modifying trading system• Launching new version of KASE web-site

CONTACT US …

Internet: www.kase.kz

e-mail: [email protected]

phone: (+7 727) 237 53 00, 272 98 98, 237 53 11, 272 06 00

fax: (+7 727) 296 64 02, 272 09 25

address: 291/3a, Dostyk av., Almaty, Kazakhstan

http://www.kase.kz/

mailto:[email protected]

introducing the kazakhstan stock exchange (kase) relevant as at march 1, 2008

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