On September 9-12, 2024, for the first time in the history of Kazakhstan, Almaty hosts the 26th Annual General Meeting of the Asia-Pacific Association of Central Depositories (ACG). The organizer is the Central Securities Depository of the Republic of Kazakhstan (KCSD).
On September 10, the panel discussions were held with the participation of foreign speakers, as well as heads of the National Bank of Kazakhstan, the Agency of the Republic of Kazakhstan for Regulation and Development of Financial Market of Kazakhstan, KASE, and stock market experts. The work of the Kazakh and international securities markets, digitalization, the use of AI, improving the quality of services, risk management of central depositories and many others were discussed at the forum.
At the event, the Governor of the National Bank of Kazakhstan Timur Suleimenov noted that the Asia-Pacific region is a dynamic market with a high investment potential due to sustainable economic development, significant infrastructure investments, technological advances and a growing appetite for cross–border investment.
At the same time, according to his words, building a strong institutional partnership between Central Asia and the Asia-Pacific region will open up unprecedented economic potential for both sides.
The Governor of the National Bank of Kazakhstan also emphasized that Kazakhstan is a reliable country for investment. The republic has attracted more than $450 billion worth of FDI over the years of independence. According to his words, this is the largest indicator among the CIS countries per capita. In addition, the country shows economic growth. Last year, Kazakhstan’s GDP reached 5.1% in 2023 due to mining, manufacturing and services. At the same time, the National Bank of Kazakhstan has achieved a significant reduction in the inflation rate to 8.4%. It is expected to decrease to 5% in a year.
Deputy Managing Director of the International Monetary Fund (IMF) Bo Li assessed the development of the economies of the Caucasus and Central Asia, showing resilience despite various economic shocks. Bo Li noted that stable growth is expected among oil importers amid domestic demand, as well as further expansion of carbon industry and oil exports. At the same time, well-designed reforms, according to him, could lead to 5-7% growth in countries over the next 4-6 years.
Having said that, new technologies, including digital, also have a major impact on many sectors – from manufacturing to healthcare and financial services. As an example, he cited an IMF study, whereby artificial intelligence could affect 40% of jobs globally and 60% of jobs in advanced economies. Therefore, investments in digital skills and social insurance will be crucial to support the development of artificial intelligence, improving productivity, and mitigating socio-economic risks.
“The IMF is committed to help countries in implementing successful product policies and promote global cooperation, including strengthening the integration of financial infrastructure between Asia-Pacific and Central Asian countries” – Bo Li added.
Chairman of the Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan Madina Abylkassymova emphasized that building mutually beneficial relations between the Asia – Pacific region and Central Asia is of strategic importance in the current conditions of the global financial system development.
Telling foreign speakers about the Kazakhstan stock market, she noted its dynamic development. The capitalization of stock market amounts to $70 billion or 28% of the country’s GDP. The volume of corporate bonds traded on KASE is $30 billion or 12% of GDP. Over the last 5 years, the volume of attracted funding in the capital market amounted to $19 billion. The number of retail investors has reached 3 million, which shows their rising role as a source of financing for business, » -said Madina Abylkassymova.
Kazakhstan works out to ensure the integration of the infrastructure of the Kazakh stock market into the ecosystem of global capital markets. In addition, work is currently underway to enable international accounting authorities such as Euroclear and Clearstream can open direct accounts with the Central Depository, and banks to provide account operator services.
Thus, the Central Securities Depository turned into regional settlement hub with a full range of depository and banking services.
According to her words, the implementation of the principles of sustainable development in the financial market remains relevant. Today, all the necessary legislative and regulatory mechanisms have been created to stimulate the development of “green” financing.
To ensure interregional links between capital markets, the Agency together with the National Bank and the Ministry of Finance applied for observer status in ASEAN+3 Bond Market Forum. This important platform gives an opportunity to exchange experience in development of bond markets.
Mark Gem, Chairman of the Risk Committee of Clearstream, noted that the current task is to unite the financial market infrastructure between Asia-Pacific region and Central Asia on a global scale. According to his words, the Central Securities Depository of Kazakhstan fully fulfills its mission and supports the bridge between the West and the East, providing many opportunities.
“Now is a time of great challenges, there are difficulties and risks in our work. Geopolitical reality can change the decades of established practice, and now we will have to change our priorities. Vulnerabilities are growing, climate change is also on the agenda. We see the development of digital tools, including AI, that might be against us. The regulator is becoming more specific and demanding. Central depositories are expected to be more efficient, faster, more transparent with lower costs and risks.”
In the changing conditions of the global market, Chairman of KCSD, Adil Mukhamejanov, suggested paying attention to the several key areas in which cooperation will be especially effective for infrastructure organizations.
Firstly, the continued advancement of digital technologies, including distributed ledger technologies, presents both opportunities and challenges. These innovations are harnessed to enhance efficiency, transparency, and security in the markets, while also addressing potential risks.
Secondly, as the global economy continues to evolve, the importance of sustainable finance is becoming ever more apparent.
“By integrating environmental, social, and governance (ESG) criteria into our operations, we can contribute to the broader global effort to combat climate change and promote inclusive growth, ” – added Adil Mukhamejanov.
Lastly, the regulatory environment in which we operate is becoming increasingly complex. The need for alignment and cooperation among our institutions is more pressing than ever. By working closely with regulators and policymakers, we can help shape a regulatory framework that supports innovation while safeguarding the integrity of the markets.
Reference:
ACG is an Association of Central Securities Depositories of the Asia-Pacific region, established in 1997 with the main goal of strengthening cooperation in various sectors to improve the efficiency of clearing and settlements. KCSD has been a member of the ACG for 17 years (since 2007).
The Central Securities Depository (KCSD) is a key infrastructure organization of Kazakhstan’s financial market in the sphere of post-trading services and has been providing services for more than 25 years. It is a single center for recordkeeping of securities ownership rights, settlement of all exchange and over-the-counter transactions. Moreover, KCSD also provides access to international securities settlement systems for the local participants.
As of January 1, 2024, total volume of financial instruments in nominal holding of KCSD amounted to KZT 126.61 trillion, recording an increase of 13.9% in comparison with the previous year. The number of securities issues has also increased, amounting to 2,386 issues at the beginning of 2024. To date, over 3 million brokerage accounts have been registered with KCSD.
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Funds Economy journalist was involved in the writing and production of this article.