The devaluation of the tenge in February 2014 has opened up the opportunity of some value plays on the KASE.

The Kazakhstan Stock Exchange (KASE) was established in November 1993 shortly after the introduction of the new national currency, the tenge (KZT). And this relationship with the national currency has remained strong over the years, with currency trading accounting for 57.4% of the $210 billion in volumes transacted over the KASE in 2013. In terms of value traded versus national GDP, the 2013 figure rose to 145%, the highest recorded since the global financial crisis. While the KASE may be the largest and most sophisticated exchange in Central Asia, it has set its sights on becoming one of the top-15 exchanges in Asia.

The KASE had 58 trading members as of June 2014, with 34 of these having the right to trade in currencies, 50 considered broader stock market members, and 17 possessing a derivatives trading license. The large number of active trading houses has seen somewhat of a dilution of market reach, with even the largest broker by volume, Asyl Invest, commanding a 3.8% market share for FY2013. Consolidation within the brokerage sector has been on the agenda over the past few years, with the number of brokerage licenses falling by 24 since 2011.

Over 2013, the KASE became a fully-fledged member of the World Federation of Exchanges, elevating its status. As well, a new stock index, the Kazakhstan Traded Index Local (KTZ Local), was launched in cooperation with the Vienna Stock Exchange. The index will track the eight most actively traded stocks on the KASE in real time.

Although currency trading—allowed in tenge, US dollars, euros, and Russian rubles—dominates trading volumes still, repo on state securities represented 37% of the $210 billion in trading recorded over 2013, though early figures for until end-May 2014 indicate that this proportion had fallen to 23.8%, with currency trading once again dominating with 72.9% of the $96.2 billion traded. The cause of the higher currency activity may be related to a February 2014 move by the government to devalue the tenge by some 18.9%, which has negatively affected the level of returns in US dollars on local securities quoted in tenge, although the devaluation has proven to be a shot in the arm for local economic growth, especially the resources sector.


New government securities represented 3.7% of all volumes over 2013, with corporate bonds coming in next at 1.2%. Equities trading was just 0.4% of all volumes traded in 2013, with repo on corporate bonds a negligible 0.2%. The figures demonstrate that of the volumes active on the KASE not related to currency trading, the overwhelming majority was related to government securities instruments. Figures from end-May 2014 demonstrate a similar trend, though equities trading slumped to just 0.1% of trading volumes.

In terms of the non-government market, 78 companies were listed on the KASE as of June 1, 2014, and a further 72 corporate bonds. The total market cap of the 78 stocks came in at $25.2 billion over the same period, while the market cap for corporate bonds was at $32.6 billion. The energy sector represented 35.5% of total market cap on the equities side, and 36.4% in terms of bonds, with financials coming in second at 26.6% and a more significant 50.5%, respectively. Telecoms was the next largest in terms of its share on the equity market, at 15.1%, though represented just 0.3% of corporate bonds.


In order to attract foreign liquidity and much-needed FDI, over 40 listed companies on the KASE have launched secondary listings, corporate bonds, and global depositary receipts (GDRs) on other exchanges around the world. The most popular of these are the London Stock Exchange (LSE), New York Stock Exchange (NYSE), and Toronto Stock Exchange (TSX), the latter being a notable player for more resource-oriented companies.


The equities market is divided into three markets, with the “first category" composed of eight issuers, nine “second category" issuers, and the more populous “third category," with 64 representative companies. Altogether, including preference shares, a total of 101 equity instruments are available on the KASE.

As of early June 2014, the eight constituent stocks that made up the KTZ Local Index had a total market cap of $18.30 billion, according to the KASE. KazMunayGas leads the pack with a total market cap of $6.04 billion, reflecting its heavy weight in the Kazakh economy. Holding around a 15% share of national oil and gas exports, the company also has a GDR listed on the LSE. Halyk Savings Bank came in second at $3.06 billion, underlining the strength of financials in the overall market. Halyk Bank features the largest branch network around the country (544 outlets), and acts as one of the main collection and paying agent for state pensions and social security payments. Mobile telecoms provider Kcell ($3.02 billion) was next in terms of market cap. The company has Kazakhstan's largest subscriber base, at 14.3 million customers, and only launched itself on the KASE (as well as a complementary GDR on the LSE) in December of 2012. Kcell is a subsidiary of Swedish telecoms giant TeliaSonera.

Another oil and gas play is KazTransOil, with a market cap of $2.33 billion. KazTransOil specializes in the transport of Kazakhstan's oil resources, and controls a 57% share of that market locally. The company was the most recent to have launched an IPO through the “People's IPO" program, involving the sale of state assets to the public. Following the IPO in December 2012, 90% of the company's shares remained with its parent company, KazMunayGas.

Kazakhmys leads the charge for the mining segment, with a market cap of $2.14 billion, as well as listings on both the LSE and in Hong Kong. The company is a vertically integrated play in the copper segment, although other rare-earth minerals available in Kazakhstan are beginning to tempt the company. Kazakhmys disposed of its non-core power and smelting assets over 2013, realizing $2 billion in the process and strengthening the company's future investment program.

Kazkommertsbank, at $849 million, advertises itself as the market leader by total assets in Kazakhstan, and specializes in the SME and corporate banking market. It is seeking to become a leading bank in the CIS region, and has representative offices across the region. Legacy fixed-line operator Kazakhtelecom ($727 million) comes in at seventh place in terms of market cap, with the majority shareholder being national fund Samruk-Kazyna. The telecoms provider controls 92.1% of the fixed-line market as of 2013, and is looking to use this position to lead the charge in broadband roll out. Finally, Bank CenterCredit, with a market cap of $129 million, may be far smaller than the other financials on the index, but claims to be the fourth largest bank by assets in Kazakhstan, being a specialist in SME finance.