Page 26 - bne_May 2021_20210501

26 I Cover story bne May 2021
The Tashkent Stock Exchange was set up in 1994 but has done little since then. A new presidential decree has launched a major capital markets reform that could change all that.
Strengthening the foundation of the Uzbek capital markets infrastructure
work put in by Uzbekistan’s allies in the development banks such as European Bank for Reconstruction and Development (EBRD) and Asian Development Bank (ADB) in the last few years, as well as various other government grants.
The decree comes with a roadmap and concrete goals, concrete people who are responsible and concrete targets to be reached within two short years, by the year 2023.
The decree calls for:
Increasing the number of issuers, new financial products (such as Sharia- complaint Sukuk bonds, exchange-traded funds (ETFs), including Gold ETFs, crowdfunding) and improving supply
by improving corporate governance (such as adoption of OECD corporate governance guidelines) and developing issuance of corporate bonds.
Development of securities market infrastructure, by improving the market access, provision of complete information and simplifying the settlement process, establishing associations and strengthening local rating agency capabilities. Also, the pricing of issues should take place based on underwriters’ suggestions. Valuation has always been
a contentious issue in Uzbekistan, as
the state looked for simple single-value setting, whereas the markets could set ranges. The edict also calls for reduction
COMMENT:
Fiezullah Saidov in Tashkent
Previously unthinkable reforms have embraced many aspects
of Uzbek economy and society. Presidential reforms in areas such as taxation, foreign exchange, regional co-operation, green energy, direct communication between the government and the general populace have been
in the international media spotlight
and have attracted the attention of international investment community.
Uzbekistan has become an active
player in international debt markets, where the government and state- owned banks have issued not only conventional Eurobonds in US dollars, but also Eurobonds issued in Uzbek soum, and banks are also getting long-term Uzbek soum-denominated loans from the international financial institutions (IFIs) and the private sector.
Banks have played the key role in funding the impressive growth Uzbekistan has been experiencing over the last four years. Although banks already constitute 80%
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of the stock market value now, due to low free float and lack of depth in the market, capital raising abilities are reduced
and many have reached their limits in lending to the country. To reduce risks and increase the funding base, capital markets need to play a more significant role.
“Uzbekistan has become an active player in international debt markets, where the government and stateowned banks have issued Eurobonds in dollars and soum”
A vibrant capital market is the missing element from the overall market infrastructure. The size of the Uzbek capital market is not commensurate with its peers in the region.
The new Presidential Edict 6207 of 13.04.2021 should mend this issue. This decree is the result of a lot of hard
of the state's share in Tashkent Stock Exchange to 25%+1 share, where Korean Exchange is already a shareholder.
Improving the IT systems of the capital market, by developing mobile applications to directly access the capital markets, allowing opening accounts for non-resident investors at