Andrei Tsalyuk, Informational agency of financial markets �IRBIS� , Almaty
(Specially for The globe)
Kazakhstan is still being identified with Russia in the so-called Far Abroad countries. But we are different. Our markets differ as well, especially the financial ones. The farther we go from each other over time, the more significant this difference is.
Our market is characterized by staidness. Such an Asian calmness and � thank God � it is an apolitical market. In addition, our financial people believe the President. Maybe not all of them believe. But it is a pity.
An objective chosen by the author of this article, while creating a total weekly cycle is to search for a peculiarity of every week in the hard currency market of our country. It is a difficult task, since sometimes it is impossible to find what one seeks. It may just be unavailable. But so far I have been lucky. Fate has presented me with a gift for the fifth consecutive week. Every week seems to be a peculiar one, like a cube in a good set for children. Sometimes the cubes form a picture, displaying the special and unique hard currency market of Kazakhstan.
Last week was also marked by something special event. This time it was a national one. By special event, I do not mean a cultural tradition of the Kazakh people, but an event in the tradition of the Kazakhstan market.
Let me remind you that during the last week and a half, under conditions in which the authorities were keeping silent about the speed of tenge devaluation up to the end of the year, the professional market participators had to �drum� the tendencies themselves. This resulted in �drumming� up the level of the hard currency corridor, which happened to be surprisingly shaky. It was so shaky in fact, that during 10 days the tenge dropped at an unprecedented speed � about 50% annual rate. Since there were no comments on behalf of the National Bank, except throwing light upon calm and gone days (the first half of February), the banks believed that it should have been so. In any case, their behavior at AFINEX and outside it proved that.
March 1, confirmed completely that the revealed tendency is in force. The official dollar exchange rate that day at once increased by a half tenge, up to 85.90. This was unusual for the current year speed. That�s why the banks having left the National Bank, while placing the notes the day before almost without any demand, demonstrated a rare for the last period unity, by purchasing the dollar. The auction volume of USD 7.46 million also seemed to be rare for the last weeks. The greater amount was only in January. A dollar exchange rate according to the best traditions of the previous week, was raised another 2500 points, i.e. by tiyn 25, up to the level of tenge 86.7000 per unit.
It should be noted, that in the same day the first congress of the republican party �Otan� was held in Almaty. In the context of the present article, this prominent political event is of significant interest, since the President Nursultan Nazarbaev stated at this congress: �I am saying once more: no unexpected events will happen in Kazakhstan�� (is quoted from �PANORAMA� newspaper �author). Though no figures were mentioned.
Then a thought occurred: �How can it not happen, when it is already happening?� In spite of the planned for 1999 tenge devaluation rate in amount of 10.2%, we have much more.
But on March 2, nothing changed at the AFINEX. Though it�s true that under the under new influence of the rising deficit of tenge, the purchasing capacity of the banks decreased. Moreover, the seller�s group was supplemented with two more participators, which offered a small dollar volumes for sale. But all these factors did not prevent the majority from purchasing almost USD six million and from raising American currency exchange rate by tiyn 10 more � up to 86.8000.
Then an interesting thing happened. In the same day, a news block appeared in REUTERS terminals concerning the introduction ceremony of GSM standard cellular communication. The title of the block sounded originally: �Tenge devaluation in 1999 � 10% - the president�. No word about communication. The journalists puzzled for a long time regarding the absence of any authority� s comments on the events taking place in the hard currency market, put into the title the main well-grounded thing: the president mentioned the figure. If REUTERS journalists are worthy of trust (it is just impossible to distrust them due to some specifics of internal discipline of this organization, which the author knows well), Mr. Nazarbaev said the following: �Devaluation as it was planned before, was 10% in the last year, most likely, we will end this year with the same volume. It will be imperceptible for the population�. (is quoted according to REUTERS report � author).
In my personal opinion, the effect surpassed all the expectations. Issuing the next evening�s comment of �IRBIS� agency regarding results of Tuesday March, 2 and making a prognosis for the next day, I made only a reservation in the end, that this news may influence somehow on the market. It is correct that I made a reservation, since we should not forget in what country we live.
In this country the President�s word has a specific property. The author has been watching this property for a long enough period due to his official responsibilities. And if the prognosis of some official and authorized persons of the upper scale of rank rarely come true (they as a rule, are of some �details� of development of our country), I cannot remember when concrete figures mentioned by Mr. Nazarbaev � named in his public speech - were not realized. Though it should be emphasized, that we are talking about the financial market, since as far as other fields are concerned, the author does not have the required information.
On Wednesday, March 3 the hard currency exchange market was quite different. I think, the participators of auction �felt deeply� the new tendency. The tenge was allowed to drop only by 5 tiyn up to 86.7500 (taking into consideration the closing price of the session), and it was executed in a very visual way. It was so visual, that on the next day there was no sign of an organized exchange demand for dollar. Due to a professional ethics, the author cannot reveal all the details of the process, since a behavior of any auction participator is legally the commercial secret of the respective participator. It should only be mentioned, that no administrative pressure on behalf of the National Bank has being observed for a long time, and the exchange rate is regulated by the market methods. An exchange game in which the head bank of our country is able to impose on traders within 45 minutes of session, sometimes is exciting and sharp, and sometimes it is dramatic in a way.
It was in March, not in February. An objective status of the market at that moment was considered to be the chronic repurchase of the dollar, low demand on behalf of the population for foreign �cash�, and a deficit of tenge. These factors prevented banks from expressing their former enthusiasm while overcoming the current resistance level. The session held on March 4 was languid, since nobody was eager to purchase dollar at the proposed rate 86.8400, expecting with some grounds a cheaper offer during the last seconds. So it happened. Under this influence the closing exchange rate came to tenge 86.8100 per dollar, having increased only by tiyn 6 in comparison with the previous auction. But even the price reduction offered at the end of the session did not provoke an active purchase � the auction volumes were not more than USD 1.32 million. The banks understood that the further game on dollar increase was senseless.
It is possible the final weekly auction held on March, 5 is somehow out of the context. But it is only for the face of it. Tenge 3 milliard being introduced in the market of repayment of the state securities, could not increase a purchase capacity of the banks. Beside that, The National Bank has abruptly reduced its activity in the primary notes market, probably �passing on the baton� to the Finance Ministry securities. In this situation, demand for hard currency was expected to be very high. But it did not happen. Volumes of the auction reached only USD 1.11 million. Moreover, the National Bank was much assisted in keeping the exchange rate at this level by another participator, �shortening� its hard currency position, and - it is not excepted � on the threshold of a new tendency.
Thus, during the tenth calendar week at AFINEX 60 dollar transactions were concluded for the total amount of US$20 580 000, with an average volume of the auction session of USD 4 million 116 thousand. In the previous week, the volume of 42 transactions was USD 7.655 million with an average auction volume of USD 1.531 million. Tenge devaluation calculated on the basis of the average exchange rate is evaluated by the trend of 28.46 annual, while for the previous seven days this index was 46.02 of annual.
That is, to my mind, the influence of the President� s word. Though it seems paradoxical, the tactics of the National Bank were influenced in the most significant way. Could they not consult? That is not important. What is important, is that an orientator has been named. Though it was not concrete, but with �most likely� (see citation). Even with this expression, it is obvious, that there will not be any abrupt devaluation in 1999. Rather we are likely to experience a smooth one, as we have already seen in 1998.
Independent from market pressures, it will be very difficult for the National Bank to break the word of the President.
Sergey MATYUSHENKO
ALMATY, March, 3
(THE GLOBE as per materials of the National Commission on Securities)
At the end of February, the National commission on securities summed up the activity of the stock market for the previous year. Last year, the market was marked by periods of both rapid gains and decline and stagnation. But many specialists acknowledge that their hopes for rapid market developments in 1998 were not justified.
In 1998, there were 467 emissions of Kazakh joint-stock companies registered, for a total amount of T92.498 billion. In 1997, the figures were 1429 and T208.039 billion respectively. In 1998, under conditions of the total stagnation of the Kazakh stock market, the first 5 emissions of non-state bonds were registered. The appearance of the non-state bonds is obviously a positive step, since they can become one of the most effective mechanisms to draw in financial resources to the �real� economy by means of the stock market.
As is well-known, the state securities market was created from 1996 to 1997. By the beginning of 1999, the state securities market was the most developed segment of the security market. However, compared to the previous year, there were no positive changes in the state securities market. In 1998, the Kazakh government emitted state securities at their nominal price, for a total amount of T173.921 billion which was an increase of T36.730 billion over the previous year. However, this increase was provided by the emission of the state�s special treasury liabilities (MEAKAM). MEAKAM has a circulation period of 10 years for the total amount of tenge 36850.3 million. Excluding this emission, the volume of emitted securities in 1998 was reduced, though insignificantly.
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