ЭКОНОМИКА И МЕНЕДЖМЕНТ
МРНТИ 06.73.35 УДК336.767.017.2
ASSESSMENT OF RETAIL INVESTMENT IN KAZAKHSTAN R.Serkebayeva*1, G.Kazbekov2, K.Khasenova3
1,2,3 «Turan-Astana» University, Astana, Kazakhstan e-mail: [email protected]
Abstract. Investment activity in Kazakhstan is still in a state of formation, and this process lags behind the needs of economic reforms. This manifests the interdependence of the entire economic system and investment activities that are the source of financing for any economic mechanism. Retails investments make up a relatively small slice of the market in Kazakhstan and involves a small number of retail investors. The government stimulates the increase in the number of investors and the economy growth by allowing the general public to acquire shares of the country’s leading companies. Political, economic, financial and social factors directly affect the public’s participation rate in investing in the stock market. Some of the most crucial financial factors are profitability of financial instruments, inflation and taxation.
The IPO market in Kazakhstan has a potential as well the increase in the number of retail investors. As the government supports the development of innovative technologies and the modernization of major funds, small and medium-sized businesses receive substantial support, and thus, have every reason for further growth, which should lead them to the stock market
Key words: stock market, retail investor, securities, liquidity, stock index.
Introduction. Throughout the years of independence, Kazakhstan has developed a new model of economic and social relations. Financial resources management has been adjusted towards to the adopted rate of the development of market economy.
As the state recognizes the benefits of Anglo-Saxon states’ financial systems with well- developed securities markets, it takes measures to develop the country's stock market. The stock market acts as a carrier of the market ideology, which postulates a broad liberalization of the economy; as a social institution, stock market is able to capitalize the savings of economic entities and the population by turning them into investments.
Investment activity in Kazakhstan is still at the stage of formation, and this process lags behind the needs of economic reforms. This reveals the interdependence of the entire economic system and investment activities that are the source of financing for any economic mechanism. The predominant reason for the weakness of investment activity in Kazakhstan is not just the legislative and legal frameworks, but also the economic crisis, the decline in production. The strategic prospects for the development of Kazakhstan's economy will largely be predetermined by the effectiveness of the deployment of country’s financial resources in real sector investments.
The development of the stock market, which possesses ample opportunities to raise capital through the circulation of liquid securities of the large domestic companies, plays an important role in the economic development strategy of Kazakhstan. Securities market allows collective investors to form an optimal portfolio with a given volume of risk and profitability, direct investors - to directly invest and receive income from enterprises.
Despite the indisputable advantages of the securities market, its liquidity remains problematic.
The development of the securities market, which began as early as the beginning of the 1990s, to date, did not lead to the formation of a full-fledged market of shares, bonds, and derivative securities in the Republic of Kazakhstan. The Republic remains in the position of the country with a low investment level. KASE trades shares of more than 90 issuers with shares of only 7 issuers being representative, constituting a narrow segment of the economy. These are banks, telecommunications and copper mining companies, operators of cellular, united electric power and main oil pipelines of Kazakhstan [1]. Many companies that are recognized by the society and have a good reputation prefer a different organizational and legal form - LLP.
At present, large investors are interested only in famous joint-stock companies as the mechanism of their operations is simple, transparent and well-practiced. Thus, the following question
arises: is the Kazakh population ready to invest today, when People’s IPO program is over? The authors attempted to answer this question through a sociological survey of citizens of Almaty and Astana.
Methodology. The methodological basis of the research conducted is general scientific research methods, qualitative and quantitative analysis, methods of systemic, comparative analysis, grouping method, surveys.
Results and Discussion. Developed stock market provides operational inter-branch capital flows of finance at the corporate level, increases the opportunities for effective and dynamic economic development, which positively impacts the country's competitiveness. The current level of the stock market development significantly hinders the processes of modernization of the economy, thus the discussions of the Republic’s global competitiveness are premature. Economic sanctions against Russian companies negatively affect the financial condition of Kazakhstani enterprises and have a negative impact on the liquidity of the country's stock market. In general, taxes in Kazakhstan are paid by more than 200 thousand legal entities; 90% of taxes in 2017 are brought by 4,920 companies, and by 4,976 companies in 2016 [2].
JSC Kazkom, that throughout all the years of state independence was one of the three main banks, and whose shares were included in the representative list, has ceased to exist as an independent entity of the financial system of the country.
Changes in stock quotes both in general and of shares from the representative list is a natural market process. Intraday volatility on KASE (excluding currency trading) is not as high as at American exchanges, but is sufficient to profit from. And the results of the "People's IPO" program showed that the shares yield may even be significantly higher than the bank deposits yield. In addition to financial prospects, this program carried an educational component as beginning investors became familiar with investment mechanisms, the concept of the securities market conjuncture, the effects of internal and external factors on the behavior of shares of issuers,etc.
The state decided to stimulate retail investors to enter the stock market by conducting the following activities:
1. Within the framework of the third stage of privatization of state property (1996-1998), 10%
of the preferred shares of national companies were traded among members of the work collective;
2. Although the "People's IPO" program did not revive the securities market, it stimulated the growth of retail investors. At the end of the second stage of the placement of JSC KEGOC’s shares on KASE the number of retail investors exceeded 34.5 thousand people.
Meanwhile, there was no mass outflow from bank deposits of individuals to the securities market. What are the reasons?
1. The population only holds strictly targeted savings in bank accounts. Securities of national companies today are more attractive for investment funds, banks, insurance companies and foreign investors.
2. There is no single database on the dividend policy of the companies. Such information is not provided neither by the state regulator, the Kazakhstan stock exchange or its subsidiary - the Irbis news agency. This infringes upon the rights of potential investors for obtaining information and causes distrust in the stock market institutions. Many private investors prefer to trade on foreign exchanges.
One of the arguments for "leaving" for foreign markets is the responsibility of foreign issuers / brokers and regulators to investors and respect for property rights.
3. According to the respondents, factors such as the quality and standard of living, the level of investment culture of companies, national traditions, the yield of securities determine the activity of the investors on the market. The overwhelming majority of the respondents (89% of 500 respondents) do not yet see themselves as investors in the securities market, although national companies are financially attractive for them.
They noted that when buying shares they will focus on the parameters of fundamental analysis, and consider the purchase of shares not simply as a source of additional profit, but the purchase of a successful business that is behind these shares. This is seen as a long-term investment.
4.Weak management in national companies. The high market value of the listed companies is an outcome of the state activities that granted these enterprises relevant assets and privileges. Therefore, according to respondents, the positive dynamics of the companies nowadays does not originate from high professional competence of the management. As a result, ‘national’ brand only attracts investors on emotional level; thus, as pragmatism guides further actions and decisions, the demand shifts towards simpler and more understandable financial instruments, such as bank deposits or government securities.
5. Pricing. Respondents were not satisfied with the prevalence of property based on the dominance of large corporate and family owners, which reduces the number of shares in free circulation and therefore affects pricing processes not in favor of a simple investor.
6.External risks. The domestic economy is dependent on the oil price fluctuations, and the state is not able to guarantee its stability.
One of the leading estimates of investment attractiveness is rankings. Rankings help to familiarize investors with the composition of the industrial potential of any area, using various objective indicators. Publicizing the rankings of the enterprises is the most universal and widely available form of distribution of "corporate" information for the investors.
Below we have listed the ranking of the companies, previously included in the "People's IPO"
program, and which enter the IPO within the international financial center at market start prices.
Table 1
Ranking by the degree of "recognizability" of companies *
Company Recognizability Would consider buying shares
JSC KazMunaiGas 100% 24%
JSC Kazakhstan Temir Zholy 100% 26%
JSC KazTransGas 92% 21%
JSC Samruk Energy 54% 7%
JSC KazAtomProm 100% 25%
JSC KazTemirTrans 39% 5%
Source: *Survey among the residents of Almaty and Astana Table 2
Ranking of companies in terms of attractiveness
Company Score in points (1 - 5) Attractive Qualities
JSC KazAtomProm 5 strategic raw materials, brand
JSC KazMunaiGas 5 assets, brand
JSC KazTransGas 5 assets, brand
JSC Kazakhstan Temir
Zholy 5 assets, brand
JSC Samruk Energy 1 assets
JSC KazTemirTrans 1 assets
Source: *Survey among the residents of Almaty and Astana
The question of participation of a retail investor in the IPO of the companies represented above remains open to this day: much depends on the level and quality of life of the population. Today, consumer spending is dominated by expenses on food, the prices of which continue to grow. The index of real money income in 2017 in relation to 2016 was 97.5% [3].
The IPO develops in different ways. The activity of the IPO market in each country is determined by the adopted investment model and the traditions of building financial systems. The IPO in the Anglo-Saxon countries focuses on the stock market as a source of investments. The situation is different in the countries of the continental Europe where the IPO concentrates more on bank lending.
The IPO industry in Kazakhstan still tries to resolve the problem of developing the stock market based on the growth of the number of issuers and expansion of the investor base, including retail investors.
For the latter, Kazakhstan Stock Exchange (KASE) conducts free seminars aimed at increasing the level of awareness of the population about the domestic stock market and its opportunities.
Kazakhstani practice of doing business in terms of innovative approaches is not stellar. While there is nothing shameful, it should be more active in adapting best practices. Neither the stock market nor the banking system succeeds in accumulating savings and transforming them into investments. The main investors are the manufacturing enterprises themselves, which account for more than 60% of the total investment. On the contrary, there are statements that pension money is invested in banks [4].
Only recently securities such as mutual funds that dramatically increase the liquidity of the stock exchange market started being offered for trading, while in Russia they have been quoted and maintain a good reputation for many years. The involvement of mutual funds in the Kazakhstani stock exchange makes it possible to turn it into a full-fledged financial instrument and raise the liquidity of the securities market as a whole. In addition to Kazakhstani asset management companies, SSGA
(US_SPY_) is registered at KASE. American business in this respect is a pioneer in the securities market of Kazakhstan. Previously, shares of Bank of America were listed on KASE as well.
The investment unit is similar to a share as it implies the partial ownership in the mutual fund property, but unlike a share, it does not entitle the investor to participate in the management of authorized capital. The only exception is investment units of closed-end mutual funds, whose owners are likened to shareholders in the collection of their rights and are able to elect a trustee.
The number of investment units issued by the management companies of open and interval mutual funds is not limited, but is mentioned in the regulatory documents which also confirm the availability of capital. Investment units of these funds can be issued and repaid continuously and independently, and, as a result, have liquidity and freely access the stock market.
The experience of the developed countries shows that venture industries attract all types of investors. Although venture business is the most effective tool for supporting and developing the real sector of the economy, its’ presence on Kazakhstani market is very limited. Around the world, venture capital is applied mainly in such industries as semiconductor electronics, computer technology, information technology and biotechnology.
This form of financing in Kazakhstan does not meet the stated goals and objectives. Without an effectively functioning financial market, the venture industry in Kazakhstan, even with the active support of the government, is impossible. According to the experts, the active development of venture capital funds, for example, in the United States was largely due to the level of development of the stock market.
In all countries the system of basic values which is comprised of three main "natural" laws - the stability of property, the transfer of the property through a treaty, the fulfillment of promises - generate the motivation for investment, especially the long-term ones. The new system of values for Kazakhstani society became a norm, and the mass domestic investors anticipate non-monopoly companies to go public.
In the Address to the people of Kazakhstan in January 2018, the president emphasized that the epoch of "oil abundance" has almost come to an end. The country needs a new quality of development and it must be primarily based on the elements of The Fourth Industrial Revolution [5]. The development of an innovative economy is no longer the prerogative of high-income countries, developing countries increasingly develop policies aimed at increasing innovation capacity and create a favorable economic climate for the innovation development.
The innovation index of the economy is largely determined by the structure the stock indices.
The absolute values of the indexes are not as important as the change in the indexes over time, because it allows us to judge the general development trend of the market. The dependence of how the shares of innovative companies affect the overall representative structure of the stock market indices reflect the level of technological development of the country. Kazakhstani index reflects the quotes of shares in a narrow segment of the economy and reveals its vulnerability.
Conclusion. The securities market is one of the key mechanisms for attracting financial resources. The availability of equity for the investor leads to increased employment, for example, the average annual growth in employment in UK listed companies was 14%, while in unquoted companies it was 1.3% [6].
The problem of expanding the investor base in the domestic practice means can be solved by increasing the liquidity of securities, which requires the development of the exchange market for derivative financial instruments, assistance in attracting foreign non-government securities, etc.
The role of a stock market for a society includes an important social component. Many companies and professions in the country exist only because there is a stock market including investment banks, investment advisory, financial institutions, brokers and financial analysts. 1.4% of all employees work in the financial and insurance sectors, and their number is projected to grow to 2%. [7].
The potential of the IPO market in Kazakhstan exists since small and medium-sized businesses, with the support they receive from the state to develop their innovative and technological potential, have every reason for further growth, which should bring them to the stock market.
References:
1 http://www.kase.kz/
2 Mostovoi, Zahar. “ Правда о Налогах: 47 Компаний Платят Половину Всех Сборов в Казахстане.” 365info.Kz, 365info.kz/2018/09.
3 Committee on Statistics of the Ministry of Energy of the Republic of Kazakhstan, GfK Kazakhstan http://www.nationalbank.kz/cont/
4 Tohtahunov, Bahtiyar. “Помогут Ли Банкам и Бизнесу Инвестиции Из ЕНПФ? .”
Zakon.kz, Zakon.kz, 13 June 2018, www.zakon.kz/4923180-pomogut-li-bankam-i-biznesu- investitsii.html.
5 State of the Nation Address by the President of the Republic of Kazakhstan Nursultan Nazarbayev. January 10, 2018. New Opportunities Under the Fourth Revolution //
http://www.akorda.kz
6 Serkebayeva, R. K. Фондовые рынки и биржевое дело: Textbook– Алматы¨Принт- С,2011 -395 p.
7 Serkebaeva R.K., Zhagyparova A.O. Evaluation of the interrelation of stock indices and economic processes in Kazakhstan. Journal: Knowledge. Publishing house: Serenity-Group (Kiev)
ҚАЗАҚСТАНДА ЖЕКЕ ИНВЕСТИЦИЯЛАРДЫ БАҒАЛАУ Р.К.Серкебаева*1, Г.К. Казбеков2, К. Хасенова3
1,2,3«Тұран-Астана» университеті,Астана қ., Қазақстан
e-mail: [email protected]
Аңдатпа. Инвестициялық қызмет Қазақстанда әлі күнге дейін қалыптасуда, әрі бұл экономиканы реформалау процессінің қажеттіліктерінен артта қалып келеді. Бұл көріністен шаруашылық механизмін қаржыландыру көзі ретіндегі, бүкіл экономикалық жүйенің және инвестициялық қызметің өзара іс-қимылы байқалады. Қазақстанда бөлшек инвестициялаудың нарықта шағын үлесі бар және инвесторлардың аздаған санын қамтиды. Жетекші кәсіпорындардың акцияларын халыққа сатып алу мүмкіндігін ұсына отырып, мемлекет инвесторлардың шеңберін кеңейтіп, бүкіл экономиканың дамуына оң әсер етіп отыр.
Халықтың қор нарығындағы инвестицияларға белсенді қатысуына саяси, экономикалық, қаржылық және әлеуметтік факторлар әсер етеді. Қаржылық факторлар арасында мынадай көрсеткіштерді бөледі: қаржы құралдарының табыстылығы, инфляция және салық салу.
Қазақстанда IPO нарығының әлеуеті бар, жеке инвесторларды ұлғайтудың да әлеуеті бар, өйткені шағын және орта кәсіпкерлік нысандары инновациялық технологияларды дамытуға және негізгі қорларын модернизациялауға мемлекеттен алып отырған қолдау, одан әрі өсуіне және оларды қор нарығына әкелуге негіз болады.
Түйінді сөздер: қор нарығы, бөлшек инвестор, бағалы қағаздар
ОЦЕНКА РОЗНИЧНОГО ИНВЕСТИРОВАНИЯ В КАЗАХСТАНЕ Р.К.Серкебаева*1, Г.К. Казбеков2, К. Хасенова3
1,2,3Университет «Туран-Астана», г. Астана, Казахстан
e-mail: [email protected]
Резюме. Инвестиционная деятельность в Казахстане до сих пор находится в состоянии становления, причем этот процесс отстает от потребностей реформирования экономики. В этом проявляется взаимозависимость всей экономической системы и инвестиционной деятельности, которая является источником финансирования хозяйственного механизма. Розничное инвестирование в Казахстане имеет малую долю рынка и охватывает небольшое количество инвесторов. Предоставляя населению возможность приобрести акции ведущих предприятий, государство расширяет круг инвесторов и позитивно влияет на развитие всей экономики. На активность участия населения в инвестициях на фондовом рынке влияют политические, экономические, финансовые и социальные факторы. Среди финансовых факторов выделяются такие показатели как: доходность финансовых инструментов, инфляция и налогообложение.
Потенциал рынка IPO в Казахстане есть, есть и потенциал увеличения розничных инвесторов, поскольку малые и средние формы предпринимательства при той поддержке, которую получают от государства для развития инновационных технологий и модернизацииосновных фондов, имеют все основания к дальнейшему росту, который должен привести их на фондовый рынок
Ключевые слова: фондовый рынок, розничный инвестор, ценные бумаги