Markets of opportunity: Kazakhstan

Sir Stephen Wright, Senior Adviser, TheCityUK

Much business attention is focused on the BRIC countries or more accurately now the ‘BRICS’ since the attendance of President Zuma of South Africa alongside leaders from Brazil, Russia and India as guests of Chinese Premier Wen Jiabao at their recent summit meeting at Sanya Island off the coast of China. This is reasonable enough given the huge size and rapid growth of these markets.

But we at TheCityUK are convinced that we must also keep our eyes on the other high-growth markets so that our members are alerted to business opportunities wherever they arise in the global economy. We are currently working to define a list of the top 15 to 20 such ‘second tier’ markets on which we will aim to develop our effort in the future.

One such market is Kazakhstan. After a couple of difficult years during the financial crisis, the Kazakh economy is recovering fast on the back of its large and rapidly growing revenues from oil, gas and minerals. Kazakhstan is the ninth largest country in the world, has the world’s most important new oil field (Kashagan) since the discovery of Prudhoe Bay in the 60s, is the world’s largest producer of uranium and is well endowed with many other minerals resources as well as extensive arable land. GDP growth in 2010 was 7%. Major UK-based companies have significant stakes in the development of Kazakhstan’s resources (UK direct investment more than trebled in the period 2006-2009) and this is backed up by important relationships between leading institutions such as the legal professions and the stock exchanges in both countries. UK exports to Kazakhstan are growing fast and are especially important in services which exceed exports of goods by a margin of more than three to one.

Having recently secured his re-election, President Nazarbayev has shuffled his Ministerial team and is embarking on a further modernisation including a programme labelled ‘Peoples IPOs’ to privatise a significant number of the 400-plus state-owned companies over the next two to three years. This should be a great opportunity for TheCityUK’s member firms among the investment advisory and management community in the UK.

Two weeks ago our Working Group on CIS Markets hosted a meeting for members to review the prospects with the Ambassador of Kazakhstan in London. The Working Group is also collaborating with the Kazakh-British Trade and Industry Council to promote our industry’s offering to decision-makers in Kazakhstan (we may organise an event in the capital Astana in September), and together we are in touch with No. 10 to ensure top-level Ministerial support for the business effort.

Members who would like to know more about the opportunities in the coming months to engage with potential partners in Kazakhstan are welcome to subscribe to the Working Group’s information bulletins. Just send us your details with any additional comments of your own in response to this article.

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