Emerging Market Economist, Emerginomics

Tatiana Orlova

Emerging Market Economist

Emerginomics

Cross Asset Strategy

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<p><strong>President Tokayev and the government view maintaining political stability in the aftermath of the managed presidential succession as their primary goal. Instead of enhancing democratic freedoms, the new leadership concentrates on poverty reduction. This year's moderate relaxation of fiscal policy gave a fillip to GDP growth, which accelerated to 4.3% in the eight months to August.</strong></p>
<p><strong>However, there are signs that the accelerating household demand is fuelling an adverse trend in the current account. We expect further KZT depreciation in the coming months, especially if Brent continues to decline. This, in turn, could fuel inflationary pressures, which are already rising. The NBK's commitment to inflation targeting may face a new serious test in the coming month. </strong></p>
<p><strong>Kazakhstan’s National Bank hiked its policy rate by 25bps in September.</strong> <strong>However, a single hike may be insufficient to counterbalance the inflationary effects of fiscal relaxation. Unfortunately, in addition to its conventional functions, the central bank is expected to participate in the government’s efforts to stimulate the economy, by extending mortgages and car loans to the population. This "double mandate" is an obstacle to proper inflation targeting. We believe that it increases the likelihood of a rise in KZT volatility in the coming months. </strong></p>
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President Tokayev and the government view maintaining political stability in the aftermath of the managed presidential succession as their primary goal. Instead of enhancing democratic freedoms, the new leadership concentrates on poverty reduction. This year's moderate relaxation of fiscal policy gave a fillip to GDP growth, which accelerated to 4.3% in the eight months to August.
However, there are signs that the accelerating household demand is fuelling an adverse trend in the current account. We expect further KZT depreciation in the coming months, especially if Brent continues to decline. This, in turn, could fuel inflationary pressures, which are already rising. The NBK's commitment to inflation targeting may face a new serious test in the coming month. 
Kazakhstan’s National Bank hiked its policy rate by 25bps in September. However, a single hike may be insufficient to counterbalance the inflationary effects of fiscal relaxation. Unfortunately, in addition to its conventional functions, the central bank is expected to participate in the government’s efforts to stimulate the economy, by extending mortgages and car loans to the population. This "double mandate" is an obstacle to proper inflation targeting. We believe that it increases the likelihood of a rise in KZT volatility in the coming months. 



Kazakhstan: National Bank Needs More Independence to Keep KZT Volatility in Check

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<p>When President of Kazakhstan Nursultan Nazarbayev resigned in March, we were concerned that political uncertainty might affect Kazakh assets. The snap presidential election due on Sunday 9 June should help allay investors' concerns. In the absence of real competition, we expect Nazarbayev’s nominee Kassym-Zhomart Tokayev to win. However, the substantial reduction in risks associated with presidential succession is unlikely to trigger an automatic upgrade of Kazakhstan’s sovereign ratings. In the last months of Nazarbayev's rule, we detected signs of increased pressure on the central bank to provide the economy with long money.  There are signs that President Tokayev is going to maintain the pressure on NBK, which we find worrying.</p>
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When President of Kazakhstan Nursultan Nazarbayev resigned in March, we were concerned that political uncertainty might affect Kazakh assets. The snap presidential election due on Sunday 9 June should help allay investors' concerns. In the absence of real competition, we expect Nazarbayev’s nominee Kassym-Zhomart Tokayev to win. However, the substantial reduction in risks associated with presidential succession is unlikely to trigger an automatic upgrade of Kazakhstan’s sovereign ratings. In the last months of Nazarbayev's rule, we detected signs of increased pressure on the central bank to provide the economy with long money.  There are signs that President Tokayev is going to maintain the pressure on NBK, which we find worrying.


Kazakhstan Snap Presidential Election Should Ensure Smooth Presidential Succession

Australia

Kazakhstan Potash Corporation Limited is a mineral exploration company with a focus on potash, gold, nickel, and copper deposits. The Company has acquired rights to two potash salt deposits in Kazakhstan, as well as interests in several mining tenements in Western Australia.

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Kazakhstan Potash Corp (KPC AU)

Kazakhstan: National Bank Needs More Independence to Keep KZT Volatility in Check

President Tokayev and the government view maintaining political stability in the aftermath of the managed presidential succession as their primary...

Tatiana Orlova

Kazakhstan Snap Presidential Election Should Ensure Smooth Presidential Succession

When President of Kazakhstan Nursultan Nazarbayev resigned in March, we were concerned that political uncertainty might affect Kazakh assets. The...

Tatiana Orlova

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)