Following its policy, the Finance Ministry held the average yield on an issue of 6-month T-bills at 19.51% at an auction on 12 October. The traded volume decreased slightly to KZT 299.9m (USD 3.7m) from KZT 309.6 (USD 3.8m) at the previous auction. According to AFINEX (Almaty Financial Instrument Exchange), there were only three participants at the auction and it was undersubscribed. No bid was received from non-residents.

The latest 3-month T-bill auction was not very active either. The issuer managed to place KZT 304.6m (USD 3.76m), less than a target of KZT400m (USD 4.94m).

The primary T-bills market is undergoing transition as the National Securities Commission (NSC) is working on a licensing system to allow broker and asset management companies to participate in auctions as primary dealers. So far, only banks have had such rights.

In the light of these moves, and due to the fact that the equity market is stagnant, T-bills will tend to be the major instruments in which non-banking investors will be able to invest in the near future. On the other hand, the recent rapid Tenge devaluation and an increased demand for Dollars have been connected with the fulfilment of syndicated loan obligations by large Kazakh banks. By mid-November, however, the demand for Dollars should decrease and the National Bank will be able to stabilise the Tenge rate. Decreased yields on foreign currency operations will bring banks back to the T-bills market. Therefore, the financial market situation may not be expected to normalise earlier than in mid-November. (AFINEX)