The attractiveness of the Kazakhstan market
Kazakhstan: 9th largest country in the world
2
A territory bigger than Western Europe
Bordering on China and Russia
World’s 9th largest country
Looking back: how the country has changed since independence
Since 1991: market-oriented economic reforms, price and trade liberalization, investor-friendly tax and legal environment
Ambitious privatization program: cash sales, voucher schemes and asset sales
1998: pension reform resulting in a well-capitalized private pension funds system
2000: first former Soviet republic to fully repay the IMF (7 years ahead of schedule)
2002: first country in the CIS to receive an investment grade credit rating
Wave of international IPOs from 2005, driven by the mining sector and listings in UK
3
Snapshot on Kazakhstan
4
Strategically positioned with stable social-
political environment
2.7m sq. km, the world’s 9th largest country Politically stable Good relationships with China, Russia, EU and the US
Successful macroeconomic policies – most
reformed economy in CIS
S&P rating BBB, Moody’s Baa2 High GDP growth rate; growing middle class Well established “Chilean style” private pension sector Developed banking sector, fully convertible currency Liberal taxation regime No restrictions on foreign investors
Human capital Virtually 100% literacy rate Ethnically diverse with Kazakh (63%), Russian (24%),
others (13%)
Real GDP: 1991-2010
5
-
25
50
75
100
125
150
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
CAGR +7%
-
25
50
75
100
125
150
1991
1992
1993
1994
1995
CAGR -9%
US$ bn, constant
-
0
0
0
0
1
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
0%
10%
20%
30%
40%
50%19
91
1992
1993
1994
1995
Inflation (CPI)
6
hyperinflation
Exchange rate
7
110
130
150
170
190
210
230
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
110
130
150
170
190
210
230
KZT / EUR KZT / USD
Real Effective Exchange Rate
8
80
90
100
110
120
130
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Index 2000 = 100
Trade and current account balance
9
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
% of GDP
Current account
Trade
Public deficit, public debt
10
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2002
2003
2004
2005
2006
2007
2008
2009
2010
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
% of GDP
Public deficit
Public debt
Consumer spending
11
US$bn
-
10
20
30
40
50
60
70
2005
2006
2007
2008
2009
2010
Unemployment
12
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
2003
2004
2005
2006
2007
2008
2009
2010
Kazakhstan: successful adaptation to the financial crisis
Quick reaction to worsening market conditions from the end of 2008 Successful debt restructuring at 3 of the 4 lenders that defaulted in 2009 Gradual decrease of Non Performing Loans since 2009
Strong position to face the global financial crisis Robust GDP growth (+7.1% y-o-y in H1 2011) Significant cash reserves (US$70bn foreign reserves) Limited budget deficit: 2.5% in 2012 and 1.5% in 2013 Low government debt
On-going reforms and policy trends Sustained focus on production of energy and mineral products Economic diversification through investments in infrastructure and training and
promotion of agricultural production Financial stability and improvement of the banking sector’s regulation Managed float of Tenge since 2011 with control of the currency appreciation
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Kazakhstan: a special case among Central Asian countries
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Kazakhstan Uzbekistan Turkmenistan Tajikistan Kyrgyzstan
146
39
18
6 5
Kazakhstan Turkmenistan Uzbekistan Kyrgyzstan Tajikistan
9 268
3 560
1 411865 820
8% 7% 7% 4% 8%
CAGR 2000-2010 Real GDP
Uzbekistan Kazakhstan Tajikistan Kyrgyzstan Turkmenistan
27
16
7 5 5
Population (2010, in millions)
Nominal GDP (2010, in billions)
Nominal GDP per capita (2010, in USD)
-
2%
4%
6%
8%
10%
12%
14%
(2.5%) 0% 2.5% 5.0% 7.5% 10.0%
Kazakhstan peer group comparison (BBB- to BBB+ rated countries)
15
Net FDI (% of GDP) for the full year 2010Real GDP growth – compounded annual growth rate 2008-2013
Net
FD
I (%
of G
DP)
Real GDP growth (%)
Russia
Kazakhstan
Brazil
Hungary
India
Portugal
Thailand
Mexico
South Africa
One of the most attractive countries compared to peers
Bahrain
Most elements from the Periodic Table
16
H
Li
Na
K
Rb
Cs
Fr
Be
Mg
Ca
Sr
Ba
Ra
Sc
Y
La
Ce
Ti
Zr
Hf
Unq
V
Nb
Ta
Unp
Cr
Mo
W
Unh
Mn
Tc
Re
Uns
Fe
Ru
Os
Uno
Co
Rh
Ir
Une
Ni
Pd
Pt
Unn
Cu
Ag
Au
Zn
Cd
Hg
Ga
In
Ti
Al
B
Ge
Sn
Pb
Si
C
As
Sb
Bi
P
N
Se
Te
Po
S
O
Br
I
At
Cl
F
Kr
Xe
Rn
Ar
Ne
He
Th Pa U Np Pu Am Cm Bk Cf Es Fm Md No Lr
Pr Nd Pm Sm Eu Gd Dy Ho Er Tm Yb Lu
Ac
Most important for industrial use
Present in Kazakhstan soil
Tb
Abundant natural resources
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Oil Gas Uranium Gold Bauxite Copper
Oil: 3% of world reserves (39.8 bn barrels), 1.8 mbpd in 2010 (2.1% of world oil production)
Gas: 1% of world’s reserves, and production of 33.6 bcm in 2010 (3.3% of world gas production)
Uranium: world’s #1 producer with production of 17.8 kt in 2010 (33% of world’s production)
Metals: (coal, iron ore, gold, copper, zinc and lead) – second largest producer in the CIS after Russia
Grain: 5.8% of global exports in 2009/10 (world #7)
Kuwait Iraq Venezuela United ArabEmirates
Iran Libya Saudi Arabia Kazakhstan Qatar Nigeria Gabon Sudan Ecuador Vietnam India
9488
77 7262
45 42 41 38 34 33 30
18
R/P – Number of years to produce known reserves at current production rates
TOP 15 countries represent 92% of world reserves
> 100 years
SaudiArabia
Iran Iraq Kuwait Venezuela United ArabEmirates
Russia Libya Kazakhstan Nigeria Canada Qatar USA China Brazil
262
138115
104 99 9860
44 40 3725 20 20 13
Bn barrels
32
A major oil producer
#9 proven reserves (3%)
#8 reserves to prod. (62 years)
Proven reserves – TOP 15 countries
Reserves to production
19
At par with the largest natural resources producers
OIL
URANIUM
IRON ORE
NATURAL GAS
ZINC
COAL
-
1
2
3
4
-1020304050
Kazakhstan
Australia
Canada
-
5
10
15
20
-
500
1 000
1 500
2 000
-50
100150200250
-
1 000
2 000
3 000
4 000
-
500
1 000
1 500
2 000
-
20
40
60
-100200300400500
-20406080
100
-100200300400500
-1020304050
Production (mbl/day)
Production (kt)
Production (mt)
Production (bn cum)
Production (kt)
Production (mt)
Reserves (bbl)
Reserves (kt)
Reserves (bn t)
Reserves (bn cum)
Reserves (mt)
Reserves (bn t)
26th 14th 19th4th
4th 8th
18th 6th29th 9th 11th (1)28th
2nd 3rd1st1st 2nd3rd
21th 11th
7th 5st3rd 3rd
10th 13th4th 8th 12th4th11th 9th2nd 6th 9th2nd
(1) Excluding Canadian Oil Sands
A strategic location to control O&G flows thanks to strong infrastructure
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RUSSIAN FEDERATION
CHINAKYRGYZSTAN
UZBEKISTAN
TURKMENISTAN
CASPIAN
SEA
“Central Asia – Center”820 m cum / day
“Orenburg-Novopskov”170 m cum / day
“Bukhara-Ural”400 m cum / day
“BGR – TBA”36 m cum / day
“Caspian Pipeline Consortium”35 m t / year
“Atyrau-Samara”15 m t / year
“Atyrau-Samara”15 m t / year
“Atasu-Alashankou”10 m t / year
RailroadOil pipelineGas pipeline
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Growing importance of Asia as a commercial partner
China10%
Rest of Asia4%
EU2723%
Russia14%
Rest of the World49%
China17%
Rest of Asia3%
EU2728%
Rest of the World45%
Russia7%
2004 2010
2004 2010Rest of Asia
3% China19%
EU2713%
Russia22%
Rest of the World43%
China6%
EU2721%
Rest of Asia7%
Rest of the World29%
Russia37%
2000
2000
EU2718%
China3%
Rest of Asia6%
Russia49%
Rest of the World24%
Rest of Asia4% China
8%
EU2726%
Russia21%
Rest of the World41%
Export by country
Import by country
Regional positioning: between China and Russia
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% of total Import % of total Export
China
Russia
0%
10%
20%
30%
40%
50%
60%20
00
2002
2004
2006
2008
2010
0%
5%
10%
15%
20%
25%
30%
2000
2002
2004
2006
2008
2010
China/Asia, gaining importance as commercial partner
Clear acceleration of commercial exchanges between Kazakhstan and China over the last decade
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Strengthening of relationships
China expected to continue investments in the energy or metals & mining sector…
…while diversifying in non-extractive industries
Strong potential for further increase of investment flows with China Willingness to diversify Kazakhstan’s export routes
Development of gas transport routes
2010/2011: signing of several agreements between Kazakhstan and China including renewable energy, gas pipeline, civil nuclear projects…
28,8%
2010
Kazakhstan’s stock market: significant catch-up potential
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31,1%
87,1%
2001 2010
31,3%
68,5%
2003 2010
25,9%
64,2%
2004 2010
28,5%
51,0%
2004 2010
Domestic market capitalisation over GDP (%)
2.8x 2.2x 2.5x 1.8x
2001 2010 2003 2010 2004 2010 2004 2010
2010 Soon
Thailand China Russia Indonesia
Kazakhstan
Top 20 Kazakh companies by market capitalization
25
(1) Merged with KazakhGold in 2011
in $m Market Cap. Sector KAZE LSE AIMEurasian Natural resources Corp. 11 011 Metals & Mining KazMunaiGas EP 6 832 Energy Kazakhmys 6 507 Metals & Mining Halyk Savings Bank 2 151 Financials Kazkommertsbank 1 521 Financials Kazakhtelecom 1 385 Telecom ATFBank 1 354 Financials Mangistau Electricity Distribution Network 1 251 Energy Mangistaumunaigaz 807 Energy Zhaikmunai 667 Energy Nurbank 575 Financials SAT & Company 564 Metals & Mining Kaspi Bank 459 Financials Bank Centercredit 389 Financials Ust-Kamenogorsk Poultry Plant 362 Consumer goods Max Petroleum 196 Energy Kant 183 Consumer goods
Polyus Gold International (1) 184 Metals & Mining KMK Munai 173 Chemicals Temirbank 151 Financials
Concluding remarks: what next?
Potential for further GDP growth
Clear opportunities for institutional investors
Asia consolidates its position as prime market for Kazakhstan
Continuation of privatization programs: People’s IPO
Equity raising on domestic and international stock markets
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"Over the past 12 months the Government of Kazakhstan implemented a number of measures on the ease of doing business. These results showed the Government's commitment to improving business environment, including business registration, building permits, investor protection. But the most impressive is that Kazakhstan has managed to conduct such reforms during the economic crisis.”
World Bank Regional Director for Central Asia Motu Konishi, November 10
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