Kyrgyz State Companies Encouraged to List Securities on Local Stock Exchange

Kyrgyzstan's Chairman of the Cabinet of Ministers, Akylbek Japarov, has signed a decree recommending that all state-owned enterprises conduct initial public offerings (IPOs) and trade their securities on the Kyrgyz Stock Exchange (KSE). Experts believe the move will stimulate stock market development and attract foreign investors. Several years ago, shares of five major state-owned enterprises, Kyrgyzaltyn, Kyrgyztelecom, Manas International Airport, Uchkun (the state printing house), and RSK Bank, were listed on KSE. The initiative served as a testing ground for improving corporate governance. At the time, stock exchange representatives noted that the process enabled state companies to modernize their operations and expand without relying on loans. “The IPO is just the beginning. According to KSE listing requirements, companies must maintain transparency, conduct public operations, and provide ongoing financial and economic disclosures to sustain investor confidence,” said KSE President Medet Nazaraliyev. Nazaraliyev told The Times of Central Asia (TCA) that the shareholders of KSE include the Kazakhstan Stock Exchange and the Istanbul Exchange, making it possible for foreign investors to participate in Kyrgyz securities trading. Additionally, under Eurasian Economic Union (EAEU) agreements, investors from across the bloc can freely purchase shares in local companies. “Transferring the trading of all state-owned companies’ securities to KSE aims to consolidate the market and ensure that state enterprises receive high-quality financial services. KSE is also working on expanding its investor base and exploring opportunities to enter foreign markets, all in the interests of our issuers,” KSE Vice President Myktybek Abirov told TCA. According to Abirov, 24 state-owned enterprises are currently listed on the exchange. Under Kyrgyz law, all transactions involving securities of open joint-stock companies must be conducted on KSE. Last year, U.S. credit rating agency S&P Global Ratings joined KSE’s list of official evaluators, alongside Kazakh and Russian firms. This partnership facilitates independent assessments of green and gender bonds issued by the exchange. Furthermore, S&P’s involvement enhances the credibility and attractiveness of Kyrgyz securities for foreign investors. In the middle of 2024, the volume of capitalization of KSE amounted to $636 million.

Kyrgyz Stock Exchange Continues to Grow

The Kyrgyz Stock Exchange (KSE) is the leader among the countries of the Eurasian Economic Union (Russia, Armenia, Kazakhstan, Kyrgyzstan, Belarus) in terms of trading volume growth. The volume of capitalization for the second quarter of 2024 amounted to $636 million. The indicator increased five times compared to the same period last year. In 2022 the exchange began trading in precious metals, and in 2023 the first trades in government securities took place. "The volumes in 2023 increased because there were very large transactions in the primary market. We hosted such companies as Aiyl Bank - more than 4.8 billion KGS ($56.4 million), State Mortgage Company - 3.8 billion KGS ($44.7 million), Entrepreneurship Development Fund - 503 million KGS ($5.9 million), and the National Electric Grid of Kyrgyzstan conducted a transaction for 5.3 billion KGS ($62.3 million). Banks and companies with state participation carried out additional capitalization,” KSE vice-president Aida Chodulova told The Times of Central Asia. According to Chodulova, all securities transactions (public and private) must now go through the stock exchange. "We are now introducing new software to make the system more modern and accessible. We are developing new areas: IPOs, digitalization, and the development of the commodities sector and the precious metals sector. We will also open a currency pairs trading and crypto exchange sector,” Chodulova said. "At the end of 2023, we held auctions and issued State Treasury Bonds with a two-year circulation term. They were issued in both the national currency and Russian rubles. Commercial banks in Kyrgyzstan and insurance companies participated in the trade. Russian Gazprombank bought some of the securities for Russian investors,” she added. Last year, KSE planned to issue “green” state treasury bonds with a five-year circulation term, with some of these securities to be sold to Russia. However, the project had to be suspended due to the international economic sanctions placed on Russia as a result of its invasion of Ukraine.