Karen Srapionov, a leading financial expert, advisor, and managing partner at Avesta Investment Group, shared valuable insights into Uzbekistan's financial and stock market performance over the past year, comparing it with previous years' trends.
Financial Market Dynamics
Discussing the overall performance, Srapionov noted, "The turnover this year is a bit slower than the last year." In 2022, the turnover was around $400mn, while for the first nine months of 2023, it was less than $200mn, indicating a decrease in large transactional activities. Srapionov attributes this to the absence of significant transactions like those of a large cement manufacturers and Banks last year, which each contributed around $50 to $70mn.
Stock Market Trends
In terms of the stock market, Srapionov highlighted the importance of smaller deals. "For deals lower than $100,000, we see about 5-6% of the market," he said, emphasizing the increasing number of such transactions. This rise is partly due to mobile trading platforms, making securities trading more accessible.
Policy Changes and Efficiency
Srapionov also addressed the frequent policy changes affecting market efficiency. He remarked, "This year was very inefficient, three changes of the regulator mean a lot." These regulatory shifts have impacted the pace of market development but are seen as opportunities for future growth.
Future Projections
Looking ahead to 2024, Srapionov expressed optimism: "2024 will be much more interesting and will bring us a few new instruments to the market." He anticipates new developments due to policies implemented this year, such as Islamic bonds and exchange-traded funds.
Key Players in the Stock Market
Regarding the composition of the stock market, Srapionov observed that "the leading 5-10 companies are usually the most traded," indicating a dominance by a few key players. However, he also mentioned recent IPOs of smaller deals and the potential for new players to enter the market in 2024.
Russian Investment Influence
On Russian investments in Uzbekistan's stock market, Srapionov noted, "We don't see any significant process here." While there is some retail investment from Russia, substantial institutional investment is lacking. This observation aligns with the broader trend of international markets affecting Uzbekistan's financial landscape.
ESG Initiatives and Renewable Energy Projects
ESG (Environmental, Social, and Governance) initiatives have become increasingly important. Srapionov mentioned, "This year the government paid special attention to ecological issues." He referred to sustainable bonds issued internationally and collaborations with international organizations targeting ESG and sustainable growth.
Renewable Energy Developments
Regarding renewable energy, Srapionov spoke of "about 30 projects... with a huge amount of investments." While only a few have launched or are in the implementation phase, significant progress is expected in 2024 and 2025, with the government moving towards a free market in energy states.
Challenges and Opportunities for 2024
Srapionov foresees 2024 as a pivotal year, with economic and political factors posing challenges but also presenting opportunities for reforms. "Very painful reforms" are expected, along with strategic and legislative changes to facilitate market growth and stability.
Srapionov's insights offer a comprehensive view of Uzbekistan's financial market and stock market over the past year. The focus on smaller transactions, regulatory changes, ESG initiatives, and the anticipation of new market instruments and players set a dynamic stage for Uzbekistan's economic landscape in the coming years.
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