The Analytical Center of the Kazakhstan Finance Association (AFC) has released a review of the Kazakhstan securities market for 2024.
Key trends of the period:
The activity of investors and issuers in the country's capital market remained quite high in 2024, despite stringent monetary conditions.
The country's stock indices ended 2024 with double-digit growth, reaching new historical highs: the KASE index increased by 33%, and the AIXQI by 28%.
Stocks rose amid increased corporate profits and dividend payouts, favorable corporate and rating events, a stable economic situation, and strong growth in the money supply (+11.3% over the 11 months of 2024).
Despite a nominal increase (+8.9%), the average dividend yield for the market at the end of 2024 was 5.3% (down from 7.4% previously) due to a faster rise in stock prices and an expansion of the list of companies not paying dividends.
By sector, the most significant gains were seen in the banking sector, fintech industry, telecommunications, and oil and gas sectors (see below).
Against the backdrop of a continuing increase in the number of new investment accounts (during the reporting period, investors in the country opened a total of 984,000 new accounts), the share of retail investors in the secondary stock market rose to 62% from 43% at the end of 2023, and may continue to grow in 2025.
Thanks to the double-digit growth of the stock market and high interest from Kazakhs in investments, the total assets under the management of investment companies increased by 686 billion tenge or 72%, reaching 1.6 trillion tenge by the end of 2024.
The volumes of placements in the primary market of government bonds (+16% to 6.0 trillion tenge) and corporate bonds (+128% to 3.5 trillion tenge) ended the year with significant growth, driven by (1) financing the budget deficit and (2) high activity from certain representatives of the quasi-public sector (60% of total placements), banks (10%), and microfinance organizations (2%).
Due to the divergent vector of monetary policy, the risk-free curve changed significantly: at the end of 2024, government bond yields decreased by 55–240 basis points at the short end but increased by 20–30 basis points at the long end. In this context, the curve from 2 to 20 years appears flat (spread of 5 b.p.) while overall maintaining inversion.
High rates at the short end of government bonds stimulated a record inflow of non-resident funds – 1.3 billion dollars or 624 billion tenge, which somewhat alleviated pressure on the national currency.
Their investments in NBK notes increased from 10 to 104 billion tenge (10.4 times), and in Ministry of Finance bonds from 445 to 975 billion tenge (2.4 times). In this context, their ownership share more than doubled, from 1.9% to 4.0%.
0 1 2 Summary
The country's stock market finished 2024 with notable growth, significantly outperforming most foreign markets (S&P500 rose by 23%, Nikkei by 19%, Shanghai by 13%, Stoxx600 by 5.9%) against a backdrop of several favorable domestic events (high dividend payouts, inflow of retail investors, favorable corporate and rating events, stable domestic situation), and external factors (high risk appetite, global monetary easing, relatively high commodity prices).
Considering the increase in prices and dividend yield, the risk-adjusted return in the local market exceeded the yields of savings instruments (tenge deposits) by more than twice, and traditional alternative investment means (housing market) by almost 10 times (new housing prices rose by only 3%, while secondary housing rose by 4.2%). At the same time, the upcoming dividend payout season for 2024 will sustain interest in local stocks in the first half of the year and may contribute to further inflows of investors into the market and growth in market capitalization (which rose to 25% of GDP in 2024, up from 22% the previous year).
Among important general initiatives for the near future, we note the elevation of the country's stock market to Emerging Market status in FTSE/MSCI classifiers, continued IPOs of quasi-public sector companies, addressing fair taxation issues, expanding the base of institutional investors via endowment funds, developing collective investment markets, rating services, and digital assets, enhancing local market liquidity, as well as updating the securities market law to align with modern realities.