FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2010KAZAKHSTAN STOCK EXCHANGEKASE strives for fair and efficient market.We work with the regulators to insure clearand comprehensive market rules.Kadyrzhan DamitovPresidentThe severe epoch of crisis seems to be endingand the global exchange markets started tofeel a warm breeze of recovery. And althoughthe markets are still volatile, the global andlocal regulators agree that the worst symptomsof the global recession are already behind andhopefully soon the global market will return toits normal stage.Due to Kazakhstan's integration into globalfinancial community Kazakhstan marketsituation in 2009 was a reflection of globaltrends. Tremendous collapses of the externalmarkets worsened the internal problems of thedomestic financial market. Under such shocksome companies were not able to withhold thepressure and ended up leaving the market.However, such "shock therapy" encouragedmobilization of resources and elaboration of anew and more effective concept of operation.In addition, growing commodity prices pushedstock prices on KASE up. However, the marketwas negatively affected by difficult situation inlocal banking sector, and increasing number ofcorporate defaults on the corporate debtmarket, as well as decrease in a number ofmarket participants.Regardless of this difficult situation on themarket Kazakhstan Stock Exchange entered2010 with relatively small losses. The totalturnover in 2009 was over 155 billion (totalturnover for 2008 was 210.6 billion). Currencymarket and repo market represent the greatershare of KASE turnover. As of January 1, 2010we entitle 126 listed companies with 74 listedshares and 89 listed bonds.KASE strives for fair and efficient market. Weoperate our own high capacity trading systemwith full functionality for all financialinstruments. We work with the regulators toinsure clear and comprehensive market rules.Currently, we provide access to 84 membersrepresenting the entire financial sector ofKazakhstan.In the nearest future we plan to develop ourclearing and settlement system to havea perfect T+N settlement cycle. We also planto introduce a risk-management system on theREPO transactions market as the first step tocomplete implementation of the morecomprehensive system. Currently, our real-timemarket data is distributed by Bloomberg andReuters and we plan to extend such servicethrough other data vendors. We are seriouslyaimed at obtaining full membership at WFE,improve our market status in FTSE countryclassification system and further developcooperation with foreign exchanges.HISTORY AND DEVELOPMENTFounded on November 17, 1993 Kazakhstan StockExchange (KASE) is the only Stock Exchange inKazakhstan. It represents a universal financialmarket with the following major sectors: foreigncurrency, government securities, corporatesecurities, repo and derivatives. KASE is a memberof the International Association of Exchanges ofthe Commonwealth of Independent States, theFederation of Euro-Asian Stock Exchanges, and in2008 obtained an affiliate status at the WorldFederation of Exchanges. It continues workingactively on establishment of bilateral andmultilateral relations with the foreign companies,exchanges and international financial institutions.KASE is regulated by the Agency for Regulationand Supervision of Financial Markets andInstitutions, which among other responsibilitiesexecutes the main functions of state control andsupervision of the security market. Creation of aRegional Financial Center of Almaty (RFCA) in2006 opened new opportunities for the StockExchange and equity market as a whole.Kazakhstan Stock Exchange was legallydetermined as an operator of the special tradefloor of the Regional Financial Center of Almaty.During the following year, Kazakhstan StockExchange elaborated and adopted a new 2007-2010 development strategy, obtained a status of acommercial organization, adopted the Code ofCorporate Governance and began the process ofadditional capitalization.With 2008 global financial turmoil, KASE revisedsome of its previous plans and postponed thedemutualization of its shares. The stock exchangefocused on other issues described in thecompany’s Development Strategy. It completelyrevised the structure of its web-site making it moreconvenient for the users; introduced changes intothe trading system; revised the listing rules andcategories to reflect changes evolved from themerger of the Main Trading Floor with the RFCASpecial Trading Floor. KASE introduced newfinancial instruments and seriously considersfurther diversification of the existing range of thefinancial instruments and services offered by theexchange to its clients.The stock market in 2009 also reflected globaltrends. While the first half of the year was rich withevents resulting from the global financial crisis –depreciation of local currency, increasing numberof corporate defaults on the corporate debtmarket; relative stabilization of the economy ingeneral and the financial market in particularshowed the first positive signs of recovery in thesecond half of 2009. To respond to increaseduncertainly of the market environment, KASEintroduced a number of regulatory changes toimprove market stability and increasetransparency.FUTURE OUTLOOKThe global financial crisis challenged marketinfrastructure around the globe, revealedweaknesses and pushed for changes. Entering2010 Kazakhstan Stock Exchange Inc. (KASE) isaimed at further strengthening of the marketstability and transparency. Improvement of servicesprovided by the exchange to the marketparticipants, launching new attractive markets anddeveloping business infrastructure will remain onour agenda for a foreseeable future.In 2010 KASE will focus on a post-crisisdevelopments taking into account lessons learnedfrom the crisis. KASE is determined to improvemarket safety, regain investor trust and attractmore market participants and issuers. In thenearest future we plan to develop our clearing andsettlement system that fully responds to the needsof the market participants. We also plan tointroduce a solid risk-management system on theREPO transactions market as the first step to acomplete implementation of a morecomprehensive system.Moreover, we are aimed at increasing transparencyof the market by promoting real-time data feedthrough global market data vendors, participatingin index cooperation projects, further improvingthe web-site of the stock exchange to make itmore user friendly and thus attracting moreusers. Continuously striving for technologicaladvancement KASE plans to make an assessmentof a current state of its technologies and introducenecessary developments that would result in betterefficiency and reliability.KASE expects 2010 to be marked with theoccasion of launching a successful derivativesmarket, which would be a challenging endeavorgiven that in an after crisis environment mostinvestors returned to a more conservativeinvestment strategy. Nonetheless, Kazakhstanimarket is ready for more attractive instruments andwe hope that derivatives market would bewelcomed by most market participants this year.During the last couple of years KASE remainedquite active internationally and in 2010 it willcontinue its work with the its peers, governmentalagencies and international organizations topromote development and visibility of theKazakhstan financial market, as well as itscompliance with mutually recognized internationalnorms and standards.PAGE 102
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2010KAZAKHSTAN STOCK EXCHANGEOFFICIAL 6 MONTH STATISTICSUS$ millions# Shares millionsTotal Volume Average Daily Volume Total Volume Average Daily VolumeStocksJul-09 40.47 1.84 17.86 0.81Aug-09 177.52 8.88 20.02 1.00Sep-09 90.87 4.13 178.45 8.11Oct-09 172.12 7.82 198.79 9.04Nov-09 2,635.25 131.76 140.05 7.00Dec-09 199.97 9.52 67.05 3.19TOTAL 3,316.19 27.33 622.21 4.86BondsJul-09 1,336.70 60.759 15,525.65 705.71Aug-09 1,173.29 58.6647 6,361.80 318.09Sep-09 1,039.59 47.2543 7,154.61 325.21Oct-09 955.338 43.4245 12,627.99 574.00Nov-09 1,020.00 50.9998 6,747.42 337.37Dec-09 1,490.71 70.9861 11,036.79 525.56TOTAL 7,015.63 55.35 59,454.27 464.32OtherJul-09 10,954.66 497.9391 0.00 0.00Aug-09 11,179.80 558.9898 0.00 0.00Sep-09 10,136.36 460.7438 0.00 0.00Oct-09 10,022.15 455.5522 0.00 0.00Nov-09 12,039.20 601.9598 0.00 0.00Dec-09 11,499.63 547.6014 0.00 0.00TOTAL 65,831.79 3,122.79 0.00 0.00MarketCapitalization(US$ millions)IndexMONTHLY STOCK VOLUME VS INDEX(US$ millions)StocksIndexMONTHLY MARKET CAPITALIZATION(US$ millions)Jul-09 45,619.43 1,191.74Aug-09 49,510.64 1,394.47Sep-09 51,160.22 1,512.84Oct-09 56,096.32 1,681.20Nov-09 58,059.71 1,837.76Dec-09 57,296.49 1,768.26CONTACT INFORMATION3,0002,5002,0001,5001,00050002,000 60,0001,8001,60050,0001,40040,0001,2001,000 30,00080060020,00040010,00020000Jul Aug Sep Oct Nov Dec Jul Aug Sep Oct Nov DecContact Name Mr. Bolat Babenov E-mail bolat@kase.kz Website www.kase.kzPAGE 103
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