BUSINESS/FINANCE

Finance In Brief

Volume of transactions in November in foreign currencies on KASE reached 32,536.7 million tenge

/IRBIS, Dec 2, 99/

In November 1999, 4,626 deals were made in foreign currencies on Kazakhstan Stock Exchange (KASE), including US dollars � 4,553, Deutsche mark � 67 and euro � 6. Total volume of transactions amounted to 32,536.7 mln tenge or equivalent of 233,811.6 thousand US dollars.

US dollar accounted for 99.8% of Exchange�s turnover.

Volume of transactions in US dollar reached $233.370 thousand (32,475.3 mln tenge) with average volume of the session $10.608 thousand. Corresponding figures for previous month: $249.135 thousand (35,180.1 mln tenge), $12.457 thousand; November 1998: $161.190 thousand (12,323.2 mln tenge), $7.676 thousand.

Tenge revaluation rate, calculated at weighted average rate of the Exchange, is estimated in November 1999 (October 31,99 = 140.2239 - November 30,99 = 137.9010) by a trend of 18.8% APR. Last month tenge devalued at an average rate of 1.0% APR.

Weighted average rate of USD to tenge, calculated by all November deals � 139.16 tenge per unit. For October � 141.21 tenge per dollar. From the beginning of 1999 through November 31, 99 corresponding figure equaled 126.17 tenge per dollar an increase from 124.50 within a month.

For Deutsche mark volume of transactions reached 775 thousand marks (57.1 mln tenge). Corresponding figures for previous month: 620 thousand (48.0 mln tenge).

Tenge revaluation rate to mark, calculated at weighted average rate of the Exchange, is estimated in November 1999 (October 31,99 = 75.6500- November 30,99 = 71.4054) by a trend of 63.8% APR. For previous month is equaled 11.5% APR.

Weighted average rate of Deutsche mark to tenge, calculated by all November deals � 73.63 tenge per mark. For October � 77.43. From the beginning of 1999 through November 31, 99 corresponding figure equaled 71.30; for the end of last month � 71.05 tenge per mark.

For euro volume of transactions in November reached 30 thousand units of the currency (4.3 mln tenge). Corresponding figures for previous month: 875 thousand (132.7 mln tenge).

Tenge revaluation rate to euro, calculated at weighted average rate of the Exchange, is estimated in November 1999 (October 31,99 = 152.0125- November 30,99 = 139.5000) by a trend of 93.63% APR. Last month tenge devalued against euro at an average of 26.69% APR.

Weighted average rate of euro to tenge, calculated by all November deals � 144.92 tenge per euro. For October � 151.72. From the beginning of 1999 through November 31, 99 corresponding figure equaled 140.77 tenge per euro, for the end of last month � 140.73 tenge per euro.

As of November 30, 99 total volume of transactions in foreign currencies on KASE in 1999 is estimated at 2,050.591 mln USD. For a similar period of last year � 141.662 mln USD.

Capitalization of the Non-state Securities market of Kazakhstan on December 3: $2147.0 million

/IRBIS, Dec 3, 99/

On December 03 capitalization of the exchange market of Non-state Securities of Kazakhstan (A + B + N without the State Block of Shares) has amounted to $2.147.0 million.

For one week capitalization has decreased by $58.5 only due to decrease in prices of HSBK common shares.

The deals can be made on KASE today in 87 tools of the 66 companies and 4 state blocks of shares.

Net Gold and Foreign Currency Reserves of the

National Bank Of Kazakhstan Reach $1.393 Billion

/IRBIS, Dec 6, 99/

The National Bank of Kazakhstan informs that gross gold and currency reserves of Kazakhstan reached $1,900.1 mln in current prices as of November 30, 1999 compared with $1,784.1 mln as of October 30, 1999.

Net gold and currency reserves of Kazakhstan as of November 30 amounted to $1,393.4 mln, increase of $1,258.8 mln from October 30.

National Bank informs that in November of this year, in current prices gross and net gold and international reserves grew 6.5 percent and 10.7 percent, respectively. Growth of $116.0 mln in international reserves was due to replenishment of currency reserves by $115.9 mln mainly by purchases in domestic currency market. Despite active operations of the National Bank with gold in international markets, in current prices gold assets rose insignificantly (by $0.1 mln) because fall of prices for gold.

Following is the table which shows international reserves of the National Bank of Kazakhstan and the monetary base as of November 30, 1999, and contains data for October 30:

* Price of gold is shown for the end of 1998 ($287.45 per 1 troy ounce)

** Net international reserves is a difference between gross reserves and liabilities in hard currency.

Issuance and Repayment Schedule for

Ministry of Finance secarities

/IRBIS, Dec 6, 99/

From December 6 to 12 on primary market for state securities of Kazakhstan for securities of the Ministry of Finance:

� Issuance, December 6 � $3 mln, MEKAVM-6 (#25, KZ46L0806A00).

� Issuance, December 7 � 500 mln tenge, MEKKAM-3, (#253, KZ43L0903A05).

� Issuance, December 9 � 500 mln tenge, MEKKAM-3 (#254, KZ43L1003A02).

� Issuance, December 10 � 600 mln tenge, MEKKAM-6 (#112, KZ46L0906A09).

� Coupon payment, December 7 � 46.2 mln tenge, (MEIKAM-3 #3, KZ31L3011991; MEIKAM-6 #1, KZ32L3011999).

� Maturity, December 9 � $15.2 mln (MEKAVM-3 #22, KZ43L0912998).

Total repayment volume of state securities of the Ministry of Finance at 138.20 tenge per dollar is estimated to be 2,146.6 mln tenge.

USD/KZT Closes at 138.33/53

/IRBIS, Dec 3, 99/

According to REUTERS, at closing of interbank currency market of Kazakhstan on December 03 tenge quotations towards US dollar equaled 138.33/53 tenge per dollar.

Compared to the results of the previous day tenge decreased by 28 points on demand against US dollar and by 41 points on supply.

On main (morning) session weighted average rate of the dollar with TOD terms equaled 138.18 (+0.10) tenge per dollar and closing quotations of 138.18/19. The evening TOM and SPT trades were unproductive.

The dollar strengthening in the interbank market was obvious today. After exchange trades closing the interbank dollar price was above than maximum today�s KASE level. The maximum speed of dollar strengthening was observed by the day closing. The spreads increased by the evening to 20-28 points.

The Almaty�s exchanges employees have noted today a very high activity in the dollar sale and, especially, baying. It could be explained by the wages receiving and the dollar strengthening.

It is possible that the evening dollar increase in the interbank market is a consequence of the mentioned above population activity. The exchanges workers hold dollars on Friday for weekends. This tactics allows them to sell the currency tomorrow and after tomorrow at the higher rate, using increased interest and solvency of the citizens. In turn that can cause the demand increase on KASE on Monday.

The interbank overnight deposits quotations testify to sufficiency of means on the banks of the second level accounts.

The IRBIS analysts believe, that on the morning session on KASE on Monday dollar will continue to increase and the rate of this increase can be higher.

Editorial

A New Asian Dragon?

Hazards of the Chinese economy

Dina TANKIBAEVA

ALMATY, Dec 6 (Special to THE GLOBE)

Trade agreement with the USA

By signing a new trade agreement with the USA last month, the Chinese authorities headed by Jiang Zemin indicated the insolvency of their economic policy. Taking into consideration that the present political system will not allow China to develop economically, the ruling circles will open the country�s economy independent of politics, whether China will enter WTO or not. Supporters of economic reforms in China ascertain that the country�s economy is stagnant. Neither the effort to increase people�s consumption by means of raised state expenses on social measures, nor the attempt to restore dying state enterprises through local commercial bank loans has assisted the economy. Innovators doubt a reported 8% economic growth during the past several years. These people believe that this index could hardly have been above zero, had there not been purposeful overestimation of statistics.

Are Chinese leaders worthy of trust, remembering their behavior in the past? The Chinese government often ignored international treaties that it had signed. For instance, the UN international agreement �On political and civil rights� that was signed by China, but the country violated it in respect to political and religious dissidents.

Of course, the international trade treaty is a different beast, and the country�s leaders understand that is they do not take any measures to improve both the national economy and people�s life, they will spoil both their ideology, and the entire political system. Obviously, if the country fulfills its responsibilities under the treaty, this will create a favorable image among foreign investors. But will China be able to fulfill its responsibilities within the present closed political system and the corrupted ruling party? It is quite clear that liberalization of the economy, however willingly it is done, cannot be combined with the strict monitoring of a centralized political system.

Trade profits will not be high for America

Anyhow, let bygones be bygones. China has received a carte blanche from the US Congress. The latter�s representatives consider the treaty rather as a political achievement than an economic one. They think that this trade agreement will act as law supreme both in the country and in its relations with other states. Gene Sperling, the White House economic advisor, hopes that thanks to this treaty �China will become a part of the really open and free international economy that will lead to international freedom and prosperity.�

It is impossible to believe that this prosperity will be equal for both parties. The USA, of course, will be able to get a wide access to the Chinese market, but direct trade profits will not be high for America.

It is China that will have a lot of profits for a long time. Reduced tariffs and abandoning other non-tariff obstacles will create favorable conditions for competitiveness, which will increase output and improve distribution of reserves. This, in its own turn, will stir up the national economy. Trade and financial investment both to and from China are expected to grow significantly. That will support Chinese industries such as textile, shipbuilding, and car building. A faster growth will be observed in the service sphere: banking, import-export, telecommunication and transport. From the moment of announcement of the treaty, foreign investors began to purchase numerous stocks with a �B� rating. The value of some companies� stocks has already grown several times over. However, the Chinese stock market was always considered to be short of liquidity, as it is large in comparison with developing countries. The national government should not have illusions in this regard, as foreign investors still consider investments to China as a risky campaign. This is caused by the fact that Chinese companies are not governed by rules commonly accepted by foreign investors. Potential investors hope that the country will change these operating regulations when the market becomes open.

Asian neighbors (Japan, Taiwan, South Korea) and the EU are supposed to gain higher profits from liberalization. These countries are suppliers of money, of long-lived products, and of transportation, all of which are advantageous compared to ineffective local products.

Other developing countries may incur losses, as they will not be able to compete with China in scientific branches of the economy. Any market progress in the country�s reserves will be directed to industries where a lot of manpower is required, i.e. where China already has the advantage. Thus, China will be able to increase its share in American and European markets at the expense of Indonesia, Thailand, Mexico, and Bangladesh.

In the 21st century, China may become the greatest world power

At present Chinese export industries are highly competitive, as shown by the country�s growing share in world trade. Increasing efficacy of the non-trade sector and service sector will escalate internal growth. The country will then require fewer investments than it does now. Having become independent from financial investments and external trade, China will begin to dominate world markets.

In the early 1990s, western economists calculated that by the first quarter of the 21st century China would be able to become the greatest power in the world. Hasn�t the USA condemned to death their own economic domination by signing the trade agreement with China on November 15,1999?

As far as Kazakhstan is concerned, China will likely recommence the 1997 project to construct an oil pipeline across Kazakhstan to the Chinese border. The Kazakhstani government, of course, will earn a windfall, after which Caspian oil will be delivered to developing and prosperous China. Kazakhstan, with its small population and wealth of natural resources, will become a province of China. It is a sad perspective, isn�t it?

KASE: USD Exchange Rate Keeps Rising

ALMATY, Dec 6 (IRBIS)

The morning trades in US dollar, Deutsche mark and Euro were held at Kazakhstan stock exchange (KASE) with TOD payment terms. 22 banks participated in the trades.

Today the trades in US dollars opened at 138.20 tenge per unit. Total of 136 deals were made. Weighted average dollar exchange rate equaled to 138.34 (+0.16) tenge per unit. Volume of the session � $11.975 mln (+$11.155 mln). Exchange rate fluctuation during the trade did not exceed0.18%. The trades were closed at 138.32/33 tenge per dollar.

The conjuncture of the market for the dollar continues to change towards increasing demand of the banks of the second tier. Demand for dollars of the banks was organized today: 18 participants only bought an American currency, while only two dealers (one of them left the floor with zero net-position, that is, he sold as many dollars as he bought) were selling them. Purchasing volumes of an American currency for some of the dealers were significant and reached 3.5 mln dollars.

A compromise between the main seller and the buyers was found at 138.33 tenge per dollar, the price at which most of remaining deals were made. Most of big transactions of the session were conducted at this price.

One hour after closing of the morning session on interbank market of Kazakhstan dollar was quoted at 138.35/45 tenge per unit, two hours later � 138.37/42. In the day session of KASE with TOD payment terms at 1:00PM the dollar was quoted at 138.05/70.

Deutsche mark, morning session, TOD: no deals, At closing of the session Deutsche mark was quoted at 71.09/39 tenge per mark.

Euro, morning session, TOD: no deals. At closing of the session euro was asked for 138.25 tenge per euro.

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