The financier, founder and owner of a leading public investment company in the CIS Freedom Holding Corp. summed up the past few years and outlined plans for the near future
On Thursday, January 24, an open lecture was held in Almaty at the site of the Kazakhstan Stock Exchange with the participation of Timur Turlov, General Director of the investment company Freedom Finance. Shares of his holding company are listed on the OTCQX Best Market in the United States and are publicly available to investors. The holding capital is $ 110 million, and total client assets are about $ 1 billion.
Timur Turlov noted several things in his speech. Thus, over the past 8 years, the Kazakhstani securities market has moved into second place in the post-Soviet space. According to him, this happened due to the fact that Ukraine slightly lost its position, and the Kazakhstani market is gaining more and more development rates every year. The government bond market is generally built on a global scale.
Of course, the Russian market as a whole is larger and more attractive for investors, but one should not overestimate its development. The main "blue chips" in Kazakhstan are national companies, a similar situation is observed in Russia. Most of these "chips" there are also state-owned corporations, or private companies that have become such recently.
Large potential for the development of the Kazakhstan securities market has a corporate bond market. The development of this direction can become a growth driver for the domestic stock market as a whole. As before, banks will remain the main client of the Kazakhstan Stock Exchange. They will continue their dominance due to the preservation of a certain structure of the economy.
Signed and successful exits to the stock market for Kazakhstan were KazTransOil’s “People’s IPO” and KEGOC.
Companies representing SMEs, such as Bast, as well as AZM, also demonstrated a positive dynamics of their securities placement.
According to Timur Turlov, he was particularly impressed by the interest of the Government of the Republic, in particular, President Nursultan Nazarbayev of the Republic of Kazakhstan, in the development of the stock market. With such patronage, one can count on the further growth of a stable financial market in the country. At the same time, the investment company understands that the entire post-Soviet region is exposed to certain financial risks associated with global and regional shocks, but this does not mean that there is no need to do anything. It is necessary to more soberly assess the situation on the market as a whole and systematically approach the further development.
Timur Turlov also answered a number of questions.
Timur, what is your company's strategy in the repo market and how did the introduction of concentration rates in June affect it?
- Kazakhstan is relatively small, but developing due to private initiative, the money market. We have done a lot for its development. If you look at our volume of stock raising, over the past year we have reduced it more than twice as a whole. The limit of concentration is not a big problem for us, because we have “at the moment” a sufficient amount of non-reclaimed collateral. We never had REPO discounts lower than 30%. Even if this concentration limit becomes twice as hard, it generally will not change our position. With an equity of 26 billion tenge, and if we, God forbid, were an American investment bank, then the average balance would be 12 times more than equity. But we are not in the States. I perfectly understand the reservations that we have. Therefore, our total assets are slightly less than 60 billion tenge.
Timur Turlov and his "new arms race"
We have no instruments in our portfolio whose value would exceed the amount of our own capital. 95% of all our assets and almost all securities that are presented on the balance sheet have a rating higher than BB. Halyk Bank has BB + rating - this is one of the highest ratings among the ratings assigned to major banks in the country. We could carry out the activities that we carry out on our own portfolio as a client of any broker. In fact, we are our own client. This is the essence of our license. For a company that has an extensive balance sheet, we have very low leverage and very high asset quality.
We capitalized the company by more than 10 billion tenge last year. In principle, few in this volume have capitalized financial companies lately. In general, we consider our position on the market as very conservative, more balanced than it was even a year and a half ago. It is hard to praise yourself, but I really like the structure of the assets that we have. Especially since this year we have greatly increased the share of bonds in our balance sheet. For example, they attracted almost 8 billion tenge for KazAgroF.
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