Putting Life into the Kazak Stock Market

After a senior Kazak parliamentarian expressed concern about the country’s poorly-developed stock market, NBCentralAsia economic analysts have called for measured to promote the kind of open and transparent businesses that would have an interest in floating their shares.



The speaker of the upper house of parliament, Kasymjomart Tokaev said on January 31 that there was virtually no domestic trading in Kazakstan because shareholders in major corporations had no interest in raising funds on capital markets.



NBCentralAsia economic experts argue that the stock market is stagnating because of the lack of transparency in business, and also because the economy is too narrowly focused on mineral extraction – above all oil.



“The economy’s strategic assets lie principally in the area of resource extraction, which is neither publicised nor transparent,” said Petr Svoik, a leading commentator. “These assets are really under political control, and there are major problems of transparency. That being the case, they simply do not issue shares.”



Analysts say that the stock market currently looks rather artificial, in that most of the trading is in government securities designed to mop up people’s pension savings.



Svoik said having a broad-based economy is a precondition for a stock market to grow. “The stock market is a litmus test of how developed and diversified an economy is. Even when there’s a lot of money circulating in the economy, if the economic system itself is secretive and monopolistic, and [company] ownership is shrouded in political mystery, then there is no future for a stock market,” he said.



Member of parliament Alexander Gusinsky would like to see new regulatory mechanisms which would require companies to make at least some of their shares available on the market. “There’s only one way to energise [the stock market] – by having real businesses floated there, and more of them,” he said.



(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)