Kazakhstan Business & Economy - The Times Of Central Asia

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Kazakhstan at a Crossroads: Navigating Geopolitical Dynamics in Eurasia

Sharing borders with China, Kyrgyzstan, Russia, Turkmenistan and Uzbekistan, Kazakhstan is the largest landlocked country in the world and the ninth largest overall by land area. Its geography makes this country a pivotal transit hub and it is now in the process of reshaping its strategic role in Eurasia. A recent significant development is the announcement of a new railway to China, which will further enhance Kazakhstan’s position in global trade, including in China’s famous Belt and Road Initiative (BRI). Deepening its relationship with China is one way that Kazakhstan seeks to diversify its economic and political ties away from Russia. At the same time, Kazakhstan is also looking to reduce its relative dependency on China and trying to balance its relationships with other major powers. Although some Western states have lately recognised this, and various international financial institutions are also assisting in enhancing Kazakhstan’s connectivity, these actors still need to pay more focused attention to Kazakhstan and work with the country in a more constructive manner. Expanding infrastructure and regional connectivity In the past, Kazakhstan has strengthened its position as a transit corridor through investments of more than $3.5 billion in the Khorgos gateway on the Chinese border (for facilitating Chinese goods being shipped to Central Asia and Europe), and other significant investments in various railways (most recently, the Shalkar–Beyneu and Zhezkazgan–Saksaul lines), as well as in the Kuryk seaport on the Caspian Sea and in the Trans-Caspian International Transport Route (TITR). The TITR is a 6,500-km corridor that links Asia with Europe and passes through various countries including Kazakhstan, Azerbaijan, Georgia, and Turkey. The Kuryk seaport has direct access to railway tracks and is fast becoming an important multi-modal route for cargo transshipment. In May 2023, Kazakhstan and China signed 47 co-operation agreements worth $22 billion. At the time, Kazakhstan’s President Kassym-Jomart Tokayev underlined that “the full exploitation of our transport and logistics capacity is of strategic importance”. He named China, Europe, Russia, and Central Asia as targets for logistical expansion. Reviewing bilateral relations with China in October last year, Tokayev proclaimed that his initiatives “confirm Kazakhstan’s readiness to strengthen our ‘all-weather’ relations and multifaceted co-operation”. Kazakhstan’s new railways amid incipient geopolitical shifts Given the above context, the recent announcement of the third railway connection between Kazakhstan and China is an important development that will enhance freight capacity and reduce border congestion. The new 272-kilometre (km) line will run in a south-east direction from Ayagoz in eastern Kazakhstan to Bakhty on the Chinese border before continuing to Chuguchak in Tacheng prefecture. The double-track railway is expected to boost freight capacity between Kazakhstan and China by more than two thirds, raising annual carriage from 28 million to about 48 million tonnes per year after its completion in 2027. The connection is a part of the major investment in a total of 1,300 km of new railway lines that are expected to facilitate exports and contribute to the TITR’s development. In the meantime, Kazakhstan has recently flashed on the geopolitical...

Kaspi.kz attracts nearly $1bn of investment in US market

Kaspi.kz has successfully conducted an initial public offering (IPO) in the U.S. and raised almost $1bn. January 16, Kaspi.kz launched IPO on the U.S. exchange NASDAQ. Initially representatives of Kazakhstan fintech planned to sell 9 million shares. But according to the results of placement the company managed to sell 11300000 ADSs, the cost of each amounted to $92. Thus the market value of Kaspi.kz amounted to $18,800,000. The placement of shares in the U.S. is led by Morgan Stanley, JPMorgan Chase & Co. and Citigroup Inc. Now shares of the company are preparing to start trading on Nasdaq Global Select Market under ticker KSPI. Certainly, this shows the company's strong start in the U.S. market. In 2020, Kaspi.kz has already enjoyed similar success and raised the same amount of money in an IPO in London, becoming the most expensive company in the history of Kazakhstan. In 2020, one depositary receipt sold at $33.75, the fintech sold 29.6 million securities. As of today, Kaspi.kz shares are owned by Baring Vostok, Mikhail Lomtadze and Vyacheslav Kim. They hold stakes of 27.53%, 24.67% and 23.47% respectively. Vladislav Kim and Mikhail Lomtadze are among the 50 richest businessmen in Kazakhstan.

“At a Crossroads” – Atlantic Council Addresses Rare Earth Elements in Central Asia

On January 23rd, the Atlantic Council’s Eurasia Center and the International Tax and Investment Center gathered together the authors of the report, “Leveraging Central Asia’s Rare Earth Elements for Economic Growth.” The report highlights the potential of Central Asia, which has remained underappreciated in terms of its rare earth elements (REE) resources, despite its increasing geopolitical significance. China currently dominates the global mining and refining of REEs, giving it a near-monopoly status. The report argues that this scenario calls for an urgent need to diversify global supply chains and suggests that Western investment could play a pivotal role in exploring and mining Central Asia's REEs, thereby contributing to the diversification of supply chains. Furthermore, such investment could have far-reaching implications for the region itself, bolstering regional integration and sovereignty, spurring economic growth, and enhancing economic freedom throughout Central Asia. Opening the discussion, Ariel Cohen, a Nonresident Senior Fellow at the Eurasia Center of the Atlantic Council, highlighted the critical geopolitical location of Central Asia, stating that REEs “may be the next big thing in Central Asia at the engine of economic growth.” Cohen praised the “visionary multi-vector policy pioneered” in Kazakhstan by President Tokayev, and characterized Kazakhstan’s relationship with Russia as “very fraught,” and defined by “multi-generational trauma. Nuclear energy is zero emission energy,” he said, but for the U.S. to capitalize on opportunities for mining REEs in Kazakhstan, “we need to do more and better.” The President of Second Floor Strategies, a public policy consulting company, Wilder Alejandro Sánchez emphasized that Kazakhstan and Uzbekistan are the most “forward-looking” nations in Central Asia in regard to REEs, whilst mining in Kyrgyzstan remains stuck in a “legal limbo,” and Tajikistan currently lacks the necessary critical infrastructure. Nether the less, he stated, REEs could become a driving factor behind regional “cooperation and integration.” Wesley Hill, an International Program Manager at the Energy, Growth, and Security Program of the International Tax and Investment Center, spoke about the international relations components of REEs. “In the same way we competed and continued to compete for other energy resources, most especially crude oil, we will be competing for REEs,” he stated. “It's happening already, this geopolitical clash [which is] primarily driven by competition between the United States and China. After the publication of this report, Beijing cut off all exports of rare earth element refining technologies to the United States. Central Asia is very much at a crossroads,” he stated. Addressing this geopolitical conflict with China over REEs, Ambassador John Herbst, a Senior Director at the Eurasia Center of the Atlantic Council, stated that Central Asia is a “critical region… rich in rare earth minerals [whilst] China is our principal adversary. They are not a friend of the United States.” Finally, Suriya Evans-Pritchard Jayanti, a Nonresident Senior Fellow at the Eurasia Center of the Atlantic Council, characterized REEs as an “extremely important development opportunity” for Central Asia, particularly given “geostrategic energy realignment after the Russian invasion of Ukraine. I think it's a geostrategic realignment opportunity for...

Kazakh PM Reports On Country’s Economic Results For 2023

On January 22nd Kazakh president Kassym-Jomart Tokayev received the country's prime minister Alikhan Smailov, who reported on Kazakhstan’s economic results for 2023, the presidential press office reported. In 2023 the country's economic growth was 5.1%. Investments in fixed capital increased by 13.7%, to $39.5 billion, while over the first nine months of 2023 $19.7 billion of foreign direct investment was attracted. The number of people employed in small and medium-sized businesses increased by 14% (by 500,000) to 4.3 million people. Inflation was reduced twofold, down to 9.8%. Kazakhstan’s foreign trade turnover last year increased by 2.2% and amounted to $126 billion, with exports exceeding imports by $16 billion. Tokayev was informed that the government fulfilled all its social obligations. Pensions were indexed by 10.5%, and by another 9% since the beginning of this year. Payments to persons with disabilities increased by 23%. The prime minister reported on the implementation of the Unified Pool of Investment Projects. Last year, 298 projects were launched. In 2024 it is planned to implement another 326 projects, including 180 projects in the manufacturing industry, creating 15,000 new jobs.

Italian Agricultural Holding Enters Kazakhstan Market

The Italian holding Bonifiche Ferraresi, which produces and markets agricultural products, has signed a memorandum of cooperation with Kazakhstan’s Agrofirm TNK. This was the result of negotiations between the Kazakh minister for agriculture, Aidarbek Saparov, and the management of Bonifiche Ferraresi in Rome last week, the Kazakh Ministry of Agriculture reported. Agrofirm TNK produces agricultural products on 400,000 hectares of land in the Akmola region, northern Kazakhstan. At the first stage of their partnership, the Italian and Kazakh companies intend to exchange experience regarding technology, seeds, and employee training. At the next stage they plan to develop processing, including pasta production. Forty enterprises currently produce pasta in Kazakhstan, the largest of which use durum wheat flour as a raw material, which has a high content of protein and iron. Traditional Italian pasta is made from this type of flour. “Kazakhstan has every opportunity to increase pasta production and exports, since it has its own raw material base. In 2022, Kazakhstan produced 15.6 million tons of soft wheat and 833 thousand tons of durum wheat, of which about 400,000 tons were exported to Italy, which is enough to increase the volume of pasta production, including in order to expand exports,” Mr Saparov said during the negotiations. The minister also told the Italian partners about the favorable investment climate in Kazakhstan, pointing out that investors can directly enter into an investment agreement with the Kazakh government to implement large investment projects, and receive certain benefits and preferences.

Air Astana Preparing for IPO

Air Astana has officially confirmed its participation in the listing of securities on the London Stock Exchange, the IFCA Stock Exchange (AIX), and the Kazakhstan Stock Exchange (KASE). This was first announced at a briefing on January 19th, which was attended by Dastan Adikhodzhaev, the director of privatization and restructuring of assets of Samruk Kazyna JSC, and Peter Foster, the president of Air Astana JSC. Adikhodzhaev noted that this decision was taken to support the instructions of the President of Kazakhstan, and to maintain a comprehensive plan for privatization for 2021-2025. "Privatization of part of state blocks, especially by bringing our largest companies to IPO, SPO is an important part. Tasks are being solved progressively, and in recent years we have made significant progress in this direction," said Adikhodzhaev. At the upcoming IPO it is planned to sell common shares in the national currency, as well as global depositary receipts in U.S. dollars. For the realization of the local offering, the company has attracted Halyk Finance JSC as joint bookrunner, Freedom Finance Global PLC as lead manager, as well as BCC Invest JSC, SkyBridge Invest JSC and Jusan Invest JSC as co-managers. The IPO is scheduled to begin on January 29th. "On behalf of the Company, I am pleased to officially confirm our intention to take Air Astana Group public,"President and CEO of Air Astana, Peter Foster commented. "As the largest airline group in Central Asia and the Caucasus, we believe that our industry status, market position and growth profile represent an attractive investment opportunity. This is an important milestone in our long-term strategy and we look forward to welcoming new Kazakhstani and international investors as shareholders of the group. The Company intends to raise an additional $120 million." According to the Skytrax World Airline Awards, Air Astana was the Best Airline in Central Asia and the CIS in 2023, the eleventh time the company has won this title. Air Astana also has a five-star rating in the category of the largest airlines by APEX (Airline Passenger Experience Association).