Investment Summary

Investment Summary

Four years of economic crisis, coupled with full-scale structural reforms have greatly influenced the macroeconomic performance of Kazakhstan.

Introduction of a national currency, resolution of the inter-enterprise arrears crisis, introduction of a new accounting system based on international principles and financial sector reforms. These are just a few examples of the changes in the macroeconomic environment of Kazakhstan.

On the legal side, Kazakhstan has initiated comprehensive legal reform and as of beginning of 1998 has had the basic principles of market oriented legal framework in place.

Undergoing reform of the civil service and the political system involves changes in the structure of all branches of power: executive, legislative and judicial.

At the microeconomic level, Kazakhstan has successfully completed small scale and mass privatisation and has shown serious intentions to privatise large industrial enterprises on a case-by-case basis.

As a result of consistent policy aimed to attract foreign investment, the net inflow of foreign direct investment in 1998 totalled $1.8 billion - one of the highest FDI figures among the transition economies.

The privatisation of five blue chip companies in the oil, gas, metal, and telecommunications sectors, scheduled for 1998, has attracted significant interest among portfolio investors in Kazakhstan’s companies and financial markets.

Kazakhstan’s securities market is at the earliest stage of its development. This fact, coupled with its short trading history on the national stock market, leave Kazakhstan’s companies, and therefore their equities, undervalued.

As a major outcome of enterprise reform, booming securities markets, stable macroeconomic fundamentals, and an ambitious investment programme in the oil sector, strong corporate earnings growth can be expected over the next few years.

© Kazkommerts Securities 1998. Please cite source when quoting.

This report has been prepared by Kazkommerts Securities and provided solely for information purposes to recipients only. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. This information does not constitute an offer to buy or sell securities. Kazkommerts Securities or its affiliated persons may be buying, selling or holding long or short positions, acting as investment bankers, be represented on the Board of the issuers in securities mentioned herein. This report is not intended for the use of private investors. Investment in Kazakhstan markets is an extremely risky activity and many persons, physical and legal, may be completely or partially restricted from dealing in the Kazakhstan securities markets.

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