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Opinion 71
which we believe will help transform Uzbekistan’s capital markets into the largest in Central Asia.
In addition to the largest cement plant in Uzbekistan, Qizilqum Cement (TSE: QZSM), and glass manufacturer Kvarts (TSE: KVTS), the presidential decree highlights the following companies to be privatised out to 2023:
• Uzmetkombinat (a listed steel producer which is slated for an international dual listing)
• Almalyk Mining (a significant gold, silver and copper miner)
• Navoi Metallurgical Mining Kombinat (a mining
conglomerate that owns the largest open-cast gold mine in
the world – Muruntau)
• Uzbekistan Airways (the national airline)
• Uzbekneftegaz (the state-owned oil & gas monopoly)
• Uztransgaz (a natural gas distribution/pipeline operator)
• Halk Bank
• Agro Bank
• Microcredit Bank
• Uzagrosugurta (a top-5 insurance company with the largest
branch network)
• Kurilishmashlizing (a construction machinery leasing
business)
• Uzavtosanoat (state-owned auto manufacturer and
producer of Chevrolet cars)
The sea change in the government’s attitude in April towards many of these companies is remarkable considering that most of them were previously regarded as strategic, and therefore had to remain state-owned.
In order to achieve the above targets, the government is
CENTRAL ASIA BLOG:
planning to pass a new capital markets law by the end of 2021 which, among other things, is expected to improve the efficiency of conducting IPOs and SPOs, designate the functions of underwriters, dramatically improve broad legislation for the protection of minority investors, enhance accounting and listing requirements, introduce Sukuk (Islamic) bonds, permit foreigners to invest in government bonds (currently not permitted), and perhaps most importantly, simplify the burdensome account-opening procedures for investors seeking to participate in the stock market and possibly go so far as to digitise the process.
The risks of capital markets development
While the presidential decree is very exciting and exactly what we have been anticipating, we will be watching closely to see how all of this positive news transpires, as execution will be paramount.
A former and just as aggressive privatisation plan was announced between 2016 and 2020 in Kazakhstan, Uzbekistan’s northern neighbour. This is what originally attracted Thomas and myself to the region, as Kazakhstan
had planned to privatise vast swathes of the economy in
order to decrease the government’s contribution of GDP
from 70% to less than 50%. This included the privatisation
of over 900 assets and companies, including the IPOs of KazPost, the national post office, Air Astana, the national airline, KazMunayGaz, the national oil & gas company, and Kazatomprom, the state uranium miner, by 2020. However, the process could be branded a failure, as it has largely been pushed back, and of the four planned IPOs, only Kazatomprom became listed. We hope Uzbekistan is able to execute its privatisation plans more effectively.
Kazakhs’ loathing of encroaching China rises as Lake Balkhash falls
Kanat Shaku in Almaty
There’s a continuously escalating hostility among Kazakhs towards China’s rapid expansion of its economic influence in Kazakhstan, but that’s no new topic I hear you say. Nevertheless, it’s a topic that won’t go away and, given some headline-grabbing disputes in recent months, now’s a good time to run a check on where things are at.
The issue took on a new environmental angle at the end of March when Kazakhs staged protests across cities and towns. Claims of China contaminating the environment focused on accusations that Kazakh authorities were allowing the Chinese
to outsource some of their polluting industries onto the territory of Kazakhstan.
Kazakh news website Orda.kz quoted Zhabolat Mamai, the man responsible for organising the protest arranged for Almaty, as saying in a rally speech: “China began construction of 56 factories in Kazakhstan. By the end of 2023, the construction of all 56 will be completed.
In return, they promise investments worth $24.5bn. Who will build these factories? Not our ordinary Kazakh [workers], but workers who arrive from China. At least
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