In a significant boost to the Kazakh economy, investments in the bonds issued by the Kazakh Finance Ministry have reached an unprecedented milestone, reaching 453 bn tenge ($1 bn), as per a report by Astana Times, citing the National Bank of Kazakhstan's monetary operations department on Aug. 2.
Head of the monetary operations department, Olzhas Igsatov, revealed that investments from non-resident investors in the government securities of the Kazakh Finance Ministry and the National Bank's notes have collectively surged by 178 bn tenge ($398.8 mn) to a total of 559 bn tenge ($1.2 bn) during the period of January to July. This marks a historic high in investments since March 2022.
The surge in non-resident investors' presence in the government securities market has been remarkable, with an increase of 6 bn tenge ($13.4 mn) in the notes segment and an impressive 171 bn tenge ($383.2 mn) increase in the government securities segment.
Notably, the year before, Kazakhstan experienced a decline of 214 bn tenge ($479.5 mn) in portfolio investments from non-residents in developing countries. This year, however, there has been a notable shift in international investors' risk sentiment, leading to an inflow of funds into the Kazakh government securities market.
Igsatov emphasized that having a diverse range of investors, including foreign participants, greatly enhances the efficiency of the government securities market. The inflow of foreign portfolio investments enables a reduction in borrowing costs and serves as an additional source of funding for the country.
Explaining the process further, Igsatov pointed out that non-residents interested in purchasing Kazakh government securities first need to acquire tenge by selling their currency on the local market. As a result of this demand, non-residents have sold approximately $400 mn since the beginning of this year, adding to the supply in the foreign exchange market.
One contributing factor to the increased interest from foreign investors has been the active communication policy of both the National Bank and the Finance Ministry. Throughout the year, they have held multiple meetings to highlight the prospects and attractiveness of the domestic government securities market.
The ongoing efforts to introduce a system of primary dealers in the public debt market are also expected to further boost the market's development and increase its overall liquidity.
The surge in investments and the growing interest from foreign investors reflect positively on Kazakhstan's economic prospects. With an improved market for government securities, the country is well-positioned to raise funds for various developmental projects, which may further drive economic growth and stability in the region.
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