EXCHANGE MARKET OF KAZAKHSTAN The 3rd Asia-Pacific New Markets Forum Busan Korea, June 15-17, 2006 Idel Sabitov First Vice-president / Kazakhstan Stock Exchange (KASE)

KAZAKHSTAN STOCK EXHANGE Closed joint stock company Non-commercial self-regulating organization Organized in November 1993 Only one stock exchange in Kazakhstan 66 members (30 banks) Closed joint stock company Non-commercial self-regulating organization Organized in November 1993 Only one stock exchange in Kazakhstan 66 members (30 banks)

1. Foreign currencies 2. Equities 3. Сorporates bonds 4. Treasury bills 5. Money market (repo operations) 6. Derivatives market is non-active now KASE is an universal financial market. There are five main trading floors on KASE

Historical data 1993 November 17– Kazakhstan Interbank Currency Exchange was organized as an joint company based on Center of interbank currency operations in National Bank of Republic of Kazakhstan July 12 – name of exchange was changed to “Kazakhstan Interbank Stock and Currency Exchange" September 29 – KASE obtained license № 1 from National Securities Commission for organization trade operation on treasury bills October 27 – began trade operation by electronic trade system.

1996 April 12 – changed name to “Kazakhstan Stock Exchange“ - KASE November 13 – obtained full license of National Securities Commission for exchange operation on securities market September 01 – divided on two exchanges – AFINEX (Almaty FINancial EXchange) and KASE. AFINEX was operated by currency and derivatives instruments. KASE had operated in stock and Tbills markets because there was law requirement to separate different markets September 19 – first trade on shares.

1997 November 05 – first trade on program of government privatization August 28 – foundation of own information agency “IRBIS” – began pension reform in Kazakhstan. It was started with accumulating pension funds April 01 – back merged AFINEX and KASE in one - KASE March – began calculate stock indexes (KASE_Shares, KASE_BY, KASE_BP) August 01 – opened special sector “automated repo operation” in money market.

2003 – turnover of all exchange markets increased to 33,8 billion dollars 113,1% of GDP Kazakhstan in 2003, but almost of this volume is a money market (63%) and foreign currency (18,9%) – turnover of all exchange markets increased to 80,4 billion dollars 143,9% of GDP Kazakhstan in 2005, corporate securities market still small share in all turnover – 3,4% (2,8 bl.). Index KASE_Shares grown to 646,42 points from 213,37 (202,95 %). Capitalization increased to 10,5 billion dollars from 3,94 billion dollars – market now is very interesting for investors in spite of not good liquidity still because Index KASE_Shares had maximum value April ,5778 points, and Capitalization increased to 31,2 billion dollars.

Turnover from 1993, USD’

Volumes of markets in 2005, USD’

Index KASE_Shares form 2005 Jan 01 to 2006 June 09

Corporate bonds 64 issuers173 issues 10,6 billion USD Corporate shares 64 issuers91 shares 31,8 billion USD Capitalization of listing securities on KASE at 2006 June 12

Ratings of Kazakhstan Borrowers

Current situations Reasons of listing for companies In main all issuers looking for big institutional investors like banks and pension funds Two main reasons: 1)issue bonds to sell it pension funds 2)to have tax privilege of profit for buy and sell securities

Plans and expectations In next two years market is waiting several IPO from big companies with government control like: Eurasian industrial association (EIA), Temir Zholy (railroad and transport company), KazMunaiGas, Air Astana, TuranAlemBank, Kazkommertsbank and etc. 20% of this IPO companies have to offer in domestic market. May be some parts of IPO will be resell in the future. For example Kazakhmys company has plans to resell 1% of shares in KASE now.

Improves We think also that grown of mutual funds in Kazakhstan and increase activity of retail in stock market will be do this market more interesting and liquidity. We think about to set T+3 settlements procedures and clearing procedures. Now we have settlements procedures based on DVP principle T+0 time each deals separately. It’s will be more convenient for foreign investors.

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