October 6, 2008
This is bne's Central Asian and Caucasus daily newsletter, a list of the top stories in region for the day. You can receive the list as a plain text or html email or as a pdf file. Manage your delivery options here: http://businessneweurope.eu/users/subs.php
Eurasia TOP STORY 1. All-Armenian bank and investment fund to be created 2. Eurasian Development Bank may decrease its investment portfolio targets 3. KazMunaiGas to give foreign partners stakes in Caspian shelf project 4. S&P could downgrade Kazakh banks this year . Other frontier markets 5. CTC expands in Moldova through Teledixi and Muzic Ramil acquisitions 6. Moldova: Transdniestria talks cancelled 7. Moldova adopts new law on mortgages 8. Mongolia: Political developments encouraging, says Khan Resources CEO Eurasia Kazakhstan 9. Almaty considers bid for 2018 winter Olympics 10. Astana pushes for progress on Caspian negotiations 11. CanArgo updates on fundraising and operations 12. Kazakhstan: Foreign reserves at $21.95bn at end-September 13. Kazakhstan to export up to 5.5 million tons of grain 14. Reserves of NBRK increase 1.3% to US$21.9bn during the second half of September 15. Senate elections valid, says Kazakh election chief 16. UralUmit PSF (KKB majority-owned) ups capital almost 10x 17. US not competing for Kazakh affection, says Rice On the website today 18. BRICKS & MORTAR: Kazakh real estate - new game, new rulesbne 19. COMMENT: Romania's irresponsible lawmakers splurge at time of crisis 20. Discontent grows in Kyrgyzstan as election chief flees 21. Parties play the blame game as Ukraine counts down to Rada dissolutionbne Eurasia Other Central Asia 22. Cement in Uzbekistan rose in price by 15-20% by the end of the season 23. Earthquake jolts south Kyrgyzstan 24. Ingo-Uzbekistan obtains licences 25. Kyrgyz NGOs claim irregularities in local elections 26. Kyrgyzstan: Parliament adopts new tax code 27. The share of private property of citizens of Uzbekistan in construction exceeded 40% 28. Trading results on "Tashkent" Republican Stock Exchange 29. Transit times decline for landlocked countries 30. Uzbekistan: EBRD to fund PET producer Tarleplast Eurasia Caucasus 31. Azerbaijan: GDP per capita to reach $5.600 by end 2008, says policy commission 32. Bank of Georgia CEO purchases shares in open market 33. Georgia: Commercial banks' assets up 26.45% in 8M08
34. Georgia: State budget expenditures GEL 4.31bn in January-July 2008 35. Georgia: Stock and bond markets 36. Georgia: Tskhinvali car bomb kills seven 37. Georgia: Communications regulator fines Russian broadcasters 38. Russian troops begin withdrawal from Georgia 39. US to open market to Georgian products
--************************************************************ Eurasia TOP STORY --************************************************************ 1. All-Armenian bank and investment fund to be created bne bne October 6, 2008
Armenia will focus on three major investment projects in the next few years, including the creation of an all-Armenian bank and investment fund, President Serzh Sarsgyan said in his address to the parliament and the nation, according to reports in the Armenian press.
"First, it's construction of a new nuclear power plant. Second, it's construction of Iran-Armenia highway. And third, it's formation of an All-Armenian bank and investment fund which will sponsor major projects," Sarsgyan said. "Such projects help resolution of strategic problems and create a possibility to boost employment."
--************************************************************ 2. Eurasian Development Bank may decrease its investment portfolio targets Visor Capital Visor Capital October 6, 2008
Thought the demand for low-interest long-term funds remains high, some clients change their plans. No share impact is expected for listed entities.
According to BOD member, Vladimir Yasinsky, Eurasian Development bank may decrease its investment portfolio targets for YE2010 by 11% to US$4.0bn. He noted that the demand for low-interest long-term funds remains high, despite some clients scaling back their plans.
The bank was jointly established by Russia and Kazakhstan in January 2006. Equity capital of the bank in US$1.5bn (67% from Russia and 33% from Kazakhstan). The bank aims to increase mutual investments in Russia and Kazakhstan by US$800m and trade turnover by US$1.4bn over the next few years.
No share impact is expected for listed entities.
--************************************************************ 3. KazMunaiGas to give foreign partners stakes in Caspian shelf project bne bne October 6, 2008
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KazMunaiGas has signed a memorandum of understanding with ConocoPhillips and Mubadala Development Company, under which its two foreign partners will take a 49% stake in the project to develop block N within the Kazakh sector of the Caspian shelf.
The deal was signed in the presence of Kazakh Prime Minister Karim Masimov in Astana yesterday October 5, Interfax reports.
"The parties should now conclude a final deal on the transfer of a 49% stake in the subsurface management contract from KazMunaiGas to ConocoPhillips and Mubadala, which will be equally divided between the companies, by December 31, 2008. KazMunayGaz will hold a blocking stake in the project," says a joint statement from the three companies.
--************************************************************ 4. S&P could downgrade Kazakh banks this year Visor Capital Visor Capital October 6, 2008
Slight negative share impact for Kazakh banks is expected due to the news item increasing awareness of the potential negative ratings action.
Yekaterina Trofima, deputy director at Standard & Poor's (S&P), commented that asset quality dynamics of the Kazakh banks remain negative. She also notes that the Agency of the Republic of Kazakhstan on Regulation and Supervision of Financial Market and Financial Organizations (AFN) has achieved significant progress in terms of provisioning policy. The provisioning level differs from bank to bank and will be considered in the banks' ratings.
Mrs Trofima believes that banks have made little progress in increasing their capital levels, which would be supporting of the ratings of Kazakh banks. Few banks have increased or even plan to increase their capital levels in the near term. She assets that raising new capital could essentially improve the situation for some banks and even for the sector as a whole. Finally, Mrs Trofima highlighted that it would be necessary for the banks to be more transparent and admit problems in their loan portfolios.
As previously reported, on 29 April 2008, S&P affirmed the ratings and forecasts of 12 Kazakh banks.
We note that S&P has had a number of Kazakh banks on negative watch, implying the possibility of a downgrade. Therefore, it should not be a surprise to investors that the ratings could be downgraded in the near term. Nonetheless, slight negative share impact for Kazakh banks is expected due to the news item increasing awareness of the potential negative ratings action.
. Other frontier markets --************************************************************ 5. CTC expands in Moldova through Teledixi and Muzic Ramil acquisitions bne bne
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October 6, 2008
Russian media company CTC Media has acquired a 51% interest in broadcasting group Teledixi SRL and Muzic Ramil SRL in Moldova for $4.1m in cash. The channel is expected to re-launch in CTC format in the fourth quarter of this year, CTC said in a statement.
Teledixi SRL and Muzic Ramil SRL started broadcasting in 2001, and currently holds broadcasting licences for 10 cities including Chisinau. As well as transmission technology that covers 98% of Moldova's territory, it also owns two production studios that enable it to provide up to 10 hours of in-house programming a day.
"Moldova is a country with a growing economy and the potential for future growth in the television advertising market," said CTC Media's chief executive Anton Kudryashov. "We are confident that our expansion into Moldova will be successful."
--************************************************************ 6. Moldova: Transdniestria talks cancelled bne bne October 6, 2008
Talks on the settlement of the Transdniestria conflict, which were to be held in Vienna on October 7 and 8, have been cancelled after Tiraspol refused to attend, Interfax reported. The talks were to have taken place in the 5+2 formal, with participants from Moldova, Transdniestria, Russia, Ukraine and the OSCE, and observers from the US and the European Union.
--************************************************************ 7. Moldova adopts new law on mortgages bne bne October 6, 2008
Moldova has adopted a new mortgage law, bringing all its provisions for mortgages under a single law. The new law is intended to remove the numerous impediments for the development of the primary mortgage market, said the EBRD, which helped Moldova draft the law.
The law will also establish the basic framework for the refinancing of mortgage creditors, including issuing mortgage securities (secondary mortgage market) as and when the international markets will stabilize and a critical mass of mortgages will be accumulated in the Moldovan banking sector.
The EBRD writes that the law will help the mortgage market in Moldova to increase through the following provision: * The law provides that mortgage lending can be undertaken by any institution, as long as it is property regulated; * The law significantly expends the range of obligations that can be secured by a mortgage (including future loans);
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* The law establishes a new regime for mortgage over future and unfinished buildings that should contribute to expanding the financing possibilities for property developers, as well as individual property buyers; * The law removes the technical impediment preventing the simultaneous/subsequent registration in the cadastre of title transfer and mortgage right over the same property, which will facilitate the financing of property purchase; * The mortgage enforcement procedure is streamlined to offer more security to both mortgagor and mortgagee. The parties also may agree on voluntary enforcement of mortgage (as opposed to court-led process), saving time and money to both parties; * The law now requires the property to be mortgaged to be independently evaluated and fully insured for the length of the mortgage, in accordance with the international practice in this industry; * The law contains a set of consumer protections provisions, based on EU Voluntary Code of Conduct for Mortgage Lending, applicable when the borrower is a consumer. In addition the confidentiality of the borrowers personal data is protected by the new law; * The law will allow the Moldovan provider of mortgages to apply the EBRD's List of the Minimum Standards and Best Practices for Mortgage Lending.
--************************************************************ 8. Mongolia: Political developments encouraging, says Khan Resources CEO bne bne October 6, 2008
Martin Quick, president and CEO of Khan Resources, the developer of Mongolia's Dornod uranium project, has issued a statement saying that recent political developments in Mongolia are "encouraging" as regards the mining industry.
Quick referred to President Nambaryn Enkhbayar's October 1 speech to the Mongolian parliament in which the he stated that, "there is no other way than for all parties concerned to accept market principles of allowing the investors to own more than 51% of the deposit."
"Khan Resources has a strong financial position and a world-class uranium deposit. Therefore, regardless of market conditions, we feel that the Company is significantly undervalued" Quick said.
Eurasia Kazakhstan --************************************************************ 9. Almaty considers bid for 2018 winter Olympics bne bne October 6, 2008
Almaty will bid to host the 2018 winter Olympics if the government gives its support, Vladimir Smirnov, deputy head of the national ski federation, said in an interview with the Associated Press. Shymbaluk near Almaty is already being rebuilt as Almaty prepares to host the 2011 Asian Winter Games, and should become one of the world's largest ski resorts by 2015. Almaty was previously put forward for the
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2014 Winter Olympic Games but failed to make the International Olympic Committee's shortlist.
--************************************************************ 10. Astana pushes for progress on Caspian negotiations bne bne October 6, 2008
The Kazakh government has called on all the Caspian littoral states to step up negotiations on the legal status of the Caspian Sea.
"As for the issue of determining the legal status of the Caspian Sea, Kazakhstan is calling not only for the continuation but for all sides to step up the negotiations, and it is prepared to discuss the proposals of partners in the Caspian process," Kazakh Deputy Prime Minister Umirzak Shukeyev said Friday October 3.
Shukeyev said that resolving the problematic issues surrounding the determination of the Caspian Sea's legal status is "complex and involves many aspects concerning above all the territorial issue," Interfax reported.
"Dividing up the sea must comply with the norms and principles of international law and practice as well as suit the interests of all Caspian states equally," Shukeyev added.
--************************************************************ 11. CanArgo updates on fundraising and operations Renaissance Capital Renaissance Capital October 6, 2008
CNR US: HOLD, target price: $0.2
Event: Last Friday (3 Oct) Market Wire reported that the SEC declared effective the registration statement on rights issuance filed by Canargo Energy (CNR). The rights offering will commence on 6 Oct 2008 and terminate on 24 Oct 2008. The rights offering, which is fully underwritten, is expected to raise gross proceeds of $24.2mn.
CNR also gave an update on its operations: * Ninotsminda field is producing 410bpd and 1.55mmcf (44mcmpd). * The company signed a gas sales agreement with Sagaredjo Gas Company for one year, with a price of $2.83/mcf ($110/mcm), after which it will rise to $4.73/mcf ($167/mcm). * CNR signed a non-binding letter of intent with a Swedish oil company to enter a farm-out and option agreement covering the Norio PSA, subject to governmental and other approvals. The farming-in party would earn an initial 5% interest in the Norio PSA to fund the acquisition and process seismic data, with an option for an additional 45% by paying 100% of the costs of an appraisal well.
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* If financing is available, CNR plans to acquire an offset vertical seismic profile on Manavi-12 well, correlating with surface seismic data, to improve seismic imaging away from the wellbore.
Action: We believe the news is positive for the company.
Rationale: The newly raised money will allow the company to continue its business, in our view. The price of the placement is a concern, but it is unlikely the company has too many other options under the current capital market conditions. --************************************************************ 12. Kazakhstan: Foreign reserves at $21.95bn at end-September Renaissance Capital Renaissance Capital October 6, 2008
On Friday (3 Oct), the Kazakh National Bank reported international reserves reached $21.95bn as of the end of September, rising for a second consecutive month, up from $21.75bn in August and $21.03bn in July. Foreign exchange purchases and the rising price of gold added $63.7mn to currency reserves and $140.4mn to gold reserves despite transfers to the National Oil Fund (now at $27.56bn, according to preliminary data) and servicing of the national debt. --************************************************************ 13. Kazakhstan to export up to 5.5 million tons of grain bne bne October 6, 2008
Kazakhstan is expected to export between 5 and 5.5 million tons of grain this year, President Nursultan Nazarbayev told a Kazakhstani-Latvian business forum Friday October 5. This is considerably less than the 9 million tons exported in 2007, Kazakhstan Today reported.
"In Kazakhstan there are millions of free planting areas, in which it is possible to invest. And we in a great need of processing agricultural production. Kazakhstan is a big agricultural country which have big opportunities," Nazarbayev said.
--************************************************************ 14. Reserves of NBRK increase 1.3% to US$21.9bn during the second half of September Visor Capital Visor Capital October 6, 2008
Increasing total reserves indicate the stability of Government finances. Because oil price has been decreasing, we expect that the growth of National Fund assets may slow.
Reserves of Kazakhstan's National Bank (NBRK) increased 1.3% to US$21.9bn during the second half of September. Foreign currency reserves declined 0.1% to US$19.9bn. Gold reserves increased 18.0% to US$2.0bn, as gold price surged by 15.7% to US$877/ounce. Total foreign reserves, including the foreign currency- denominated part of the National Fund, increased 2.9% to US$49.5bn.
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Deposits of commercial banks with the National Bank decreased 50.7% to US$1.7bn indicating lower short-term liquidity, but still remain at a high historical level.
Increasing total reserves indicate the stability of Government finances. Because oil price has been decreasing, we expect that the growth of National Fund assets may slow. In addition, last month the Government increased planned transfers from the Fund to the National Budget by 150% to KZT840bn (US$7.0bn) for 2009. The transfer was increased to cover expected lower taxation of non-resource sectors next year.
--************************************************************ 15. Senate elections valid, says Kazakh election chief bne bne October 6, 2008
The head of Kazakhstan's Central Election Commission, Kuandyk Turgunkulov, has declared that the Saturday October 4 elections to the senate - the country's upper house of parliament - valid. Results are due to be formally published on October 13.
Turgunkulov said that candidates for the seats being contested had won majorities and there would therefore be no need for run-offs in any of the constituencies.
32 of the seats in the senate are filled by indirect elections, with 16 of the seats being contested each two years. The remaining 15 seats are filled by presidential decree.
"According to preliminary data from election commissions in the regions, Astana and Almaty, 16 senators have been elected to the Kazakh parliament, with results available from all the regions in the first round," Turgunkulov said.
There were over 200 observers, including 50 from outside Kazakhstan, monitoring the elections. According to CIS observers, the voting was free and fair, Ria Novosti reports. However, there are understood to have been no opposition candidates among those standing for office.
--************************************************************ 16. UralUmit PSF (KKB majority-owned) ups capital almost 10x Renaissance Capital Renaissance Capital October 6, 2008
KKB LI: HOLD, target price: $15.6 KKGBp KZ: BUY, target price: KZT420
Event: According to Interfax on 3 Oct, shareholders of UralUmit Pension Saving Fund (PSF) have boosted its authorised capital more than 10x to KZT4.84bn ($40.3mn), up from KZT440mn ($3.6mn), via the issuance of 40,000 additional common shares. The capital increase represents an early response to the new regulatory requirements with regards to capital, to come into force in 2009. KKB is
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the largest shareholder in UralUmit; other major shareholders include Vneshinvest Company and Terminal (the latter managed by Astana-Finance). As background, a total of 14 PSFs currently operate in Kazakhstan. The contributory pension plan has been used in Kazakhstan since 1998 along with a defined benefit pension plan.
Action: Neutral for KKB, in our view.
Rationale: The capital increase is good news for the pension fund, but is a relatively small amount in the context of KKB's capital of around $2.8bn as of end-June 2008. --************************************************************ 17. US not competing for Kazakh affection, says Rice Visor Capital Visor Capital October 6, 2008
US secretary of state Condoleezza Rice has denied that Washington is competing with Russia for influence in Kazakhstan.
At an Astana press briefing after talks with Kazakh Foreign Minister Marat Tazhin, Rice said that the US's economic and political relations with Kazakhstan are based on the principle of transparency. "The United States is not competing with other countries for Kazakhstan's affection in energy matters. Kazakhstan has excellent relations with its neighbours, and that is the way things must stand," Rice said.
On the website today --************************************************************ 18. BRICKS & MORTAR: Kazakh real estate - new game, new rulesbne bne October 3, 2008
After years of easy pickings, property developers in Kazakhstan need to be more professional if they are to attract fresh investment and new clients in the post-credit crunch era. That's the clear message from NAI Kazakhstan Aristan, a joint venture established in January this year between NAI Global, a major player in the US real estate market, and Kazakhstan's Aristan Group, a diversified property and financial services group.
NAI Kazakhstan Aristan is looking to improve industry standards in the Central Asian republic's real estate market which, after enjoying a boom for best part of this decade, is now having to face up to the grim possibility of a bust. "We see it as our task to develop the local market," says Nursultan Kassenov, managing director at NAI Kazakhstan Aristan, adding: "There's still a lack of transparency in the construction and real estate industry in Kazakhstan."
By way of example, he cites the lack of official criteria for office classification, which means that in the past some commercial real estate developers have played fast and loose with the truth when it comes to claims about the quality of their projects. "Contrary to what developers may say, there's currently only two real 'A+ Class' office developments in Kazakhstan, both of which are in the Regional Financial Centre of Almaty district," claims Kassenov, adding that many supposedly 'A Class'
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commercial properties are barely up to internationally recognised 'B' or even 'C' classification standards. Kassenov says that NAI Kazakhstan Aristan is working with the likes of international property consultants such a CBRE and DTZ to compile a commonly agreed set of classification standards that will match those in developed markets elsewhere in the world.
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--************************************************************ 19. COMMENT: Romania's irresponsible lawmakers splurge at time of crisis bne bne October 6, 2008
In Romania, electoral weapons still haven't evolved enough. They don't come in the form of laser-guided missiles, but as old-style carpet bombing. Or so it seems after a majority of lawmakers in the lower Chamber of Deputies voted October 1 to increase the wages of half a million teachers and other education personnel by 50% ahead of legislative elections due November 30.
Just a week after President Traian Basescu, speaking before parliament in a pre- electoral statement, warned that the next government must control spending on wages to prevent pay rises feeding inflation and risking missing the euro-adoption target date in 2014, lawmakers defiantly decided to increase teachers' wages by a half instead of the 9% agreed by the Senate, parliament's upper house.
The move didn't just belong to deputies from a certain party, but from most parties, especially those opposing Basescu: the Social Democrats, the Conservatives, and nationalist Greater Romania Party and even from some of the governing Liberals. The same Chamber of Deputies, the larger of the two chambers, on September 23 voted to increase state pensions by 25% to 50%, a measure that the government has already contested with the Constitutional Court.
Economy Minister Varujan Vosganian, a Liberal, warned that if signed into law by Basescu, the measure would be a disaster for Romania's economy because the spending effort would more than triple the budget deficit next year to 7% of GDP from a targeted 2%, while also completely slash all the much-needed infrastructure investments. Vosganian, who even asked for an urgent meeting of the country's Supreme Defense Council to debate the issue, warned that, "the situation could cause a conflict among state institutions" and is prone to trigger similar demands by all other employees paid from the public budget. The decision indeed started spiraling out of control as the Public Clerks' Trade Union demanded a similar increase of their wages and threatened to stage a general strike if their demands wouldn't be met.
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--************************************************************ 20. Discontent grows in Kyrgyzstan as election chief flees
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bne bne October 3, 2008
Local elections are not usually a big deal in Kyrgyzstan, but as the population prepares to vote on October 5, the country has been engulfed in its greatest political scandal since the 2005 revolution.
When Klara Kabilova, the head of Kyrgyzstan's Central Election Committee, fled the country on September 26, she left behind a recorded statement in which she claimed to have received death threats from the Kyrgyz president's son Maxim Bakiyev. Kabilova, whose whereabouts is currently unknown, said that Maxim Bakiyev had put pressure on her to eliminate opposition candidates from the polls.
"If something like this is happening to somebody at my level, then I can imagine what is happening to simple Kyrgyz citizens," she said in the video, which is being circulated by opposition activists.
Kabilova was known as one of President Kurmanbek Bakiyev's closest and most loyal political associates, and speculation about her flight is rife in the Kyrgyz capital Bishkek, which is plastered with posters from rival candidates. "People in Bishkek are talking about nothing else, it's almost impossible to work here," said one Bishkek- based aid worker. "There's a feeling it's possibly the most significant crisis in Kyrgyzstan since the revolution."
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--************************************************************ 21. Parties play the blame game as Ukraine counts down to Rada dissolutionbne bne October 6, 2008
Ukrainian President Viktor Yushchenko has set parties a deadline of Tuesday, October 7 to reach a new coalition agreement, otherwise he will dissolve Ukraine's parliament, the Verkhovna Rada, and call fresh elections.
As of October 3, Yushchenko has had the constitutional right, but not the obligation, to dissolve parliament following the collapse in September of the coalition between the Bloc Yulia Tymoshenko (BYuT) and the president's Our Ukraine/People's Self- Defence (NU-NS).
"I fully understand that I am absolutely entitled to dissolve the parliament today," the presidential press service quoted Yushchenko as telling journalists on Saturday October 4. However, Yushchenko said he could wait until October 7 to see if a coalition appeared.
But hopes for renewing the previous "democratic" coalition by taking onboard the small Volodomyr Lytvyn Block led by former speaker Volodomyr Lytvyn were dashed on October 3. Members of the Lytvyn Bloc declared that the coalition negotiations were merely "a cynical political game," according to Lytvyn's faction leader Oleh
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Zarubinskiy. "The coalition of the three [ByuT, NU-NS, and Lytvyn Bloc] is impossible," he said at a briefing, according to Interfax.
Including the Lytvyn Bloc in the coalition could have restored its majority in the Rada. The coalition had been technically a minority government following the defection of two deputies in June. Without including the Lytvyn Bloc, restoring the coalition would have done little to overcome the political instability and deadlock.
If you want to read the rest of this article click here Eurasia Other Central Asia --************************************************************ 22. Cement in Uzbekistan rose in price by 15-20% by the end of the season Essential Research Essential Research October 6, 2008
On the threshold of the end of construction season the cement of leading brands selling in Uzbekistan rose in price as reported Uzbek Republican Commodity Exchange (UzRCEx). According to the results of trade sessions in UzRCEx the cement of brand PC400 D-20 rose in price by 15-20% up to 120-125 thousand UZS per ton (90-93 USD).
Analysts of the exchange connect the price growth with cement supply decrease in the exchange. It is interesting that price leap on brand PC400 D?20 was occurred in the context of significant supply increase of another cement brand ShPC400 for the same period of time.
Commenting the results of the last trades, experts of the market explain local price increase by assumption that majority of brokers participated in the market had clients' instructions to purchase PC400 D-20 in particular, with quite high limit of possible price increase.
--************************************************************ 23. Earthquake jolts south Kyrgyzstan bne bne October 6, 2008
A 6.3 magnitude earthquake struck 55 kilometres east of Sary-Tash in south Kyrgyzstan at 9.25pm yesterday October 5, according to the US Geological Survey. There have been no immediate reports of major damage or casualties, Kyrgyzstan's emergencies ministry said. The quake was felt in Osh - Kyrgyzstan's second city - and in the densely populated Fergana Valley. Its epicentre was near the borders of Tajikistan and Uzbekistan, and tremors were reported in both Dushanbe and Tashkent.
--************************************************************
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24. Ingo-Uzbekistan obtains licences bne bne October 6, 2008
Ingo-Uzbekistan, a newly formed subsidiary of Russian insurance company Ingosstrakh, has received a licence to provide 16 types of insurance from Uzbekistan's Ministry of Justice. Ingo-Uzbekistan was created after Ingosstrakh acquired 75% of Tashkent-based Standard Insurance Group in April this year. It was set up by Ingosstrakh, Uzbekistan Airways, Bukhara Oil-processing Plant and other organizations and individuals. Ingo-Uzbekistan director Rustam Turaev said the company aims to take 20% of the Uzbek insurance market.
--************************************************************ 25. Kyrgyz NGOs claim irregularities in local elections bne bne
Counting is underway in Kyrgyzstan after local elections took place yesterday October 5. Results are due to be announced later today.
The country's Central Election Commission reported that as of 4pm turnout was 44.4%, with the highest turnout in Chui oblast. A record number of candidates - 15,139 - stood for election.
Observers from local NGOs have claimed there were a number of irregularities during the voting process, news agency 24.kg reports.
"Mass taking of voters to polling stations, multiple voting and other violations are traced almost at every polling station. Voters, some in a quite drunk condition, are taken from one station to another by vans," the Iterbilim Human Rights Center is quoted as saying.
This is the first election in Kyrgyzstan at which there have been no international observers. The Central Election Commission told local journalists this had been because applicants "either got late with applications or messed up the paper work".
--************************************************************ 26. Kyrgyzstan: Parliament adopts new tax code bne bne October 6, 2008
The new edition of Kyrgyzstan's tax code has been adopted at a plenary meeting of the Kyrgyz parliament, Kabar reports. Temirbek Kurmanbekov, chairman of the state committee for taxes and collections, said the number of taxes had been halved in the new code. It is due to come into effect in January 2009, after it is approved by President Kurmanbek Bakiyev.
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--************************************************************ 27. The share of private property of citizens of Uzbekistan in construction exceeded 40% Essential Research Essential Research October 6, 2008
In the first half of the year in Uzbekistan there were construction works held to the sum of 1.46 trillion UZS, this is 9.1% more than in the same period of time in the last year.
According to the data of State Department of Statistics of the Republic of Uzbekistan, 67.2% of total volume of construction works belongs to new construction, reconstruction, expansion and technical reequipment of enterprises, 21.2% to overhaul and current repair and 11.6% to other contract operations.
The structure of construction works delivered by construction companies of different types of ownership by their own was the following: the share of private property of citizens in January?June 2007 was 36.3% to the total volume. In 2008 this level reached 40.1%.
The share of property of economical associations and state property for the period considered in 2007was 43.5% and 11.7% respectively. These indicators in the same period of time in 2008 equal 39.7% and 9.9%. The share of property of joint ventures, foreign citizens and organization in 2007 was 2.7%, in the current year it is 4.3%. Other types of ownership of citizens of the republic was 5.8% and 6% in 2007 and 2008 respectively.
--************************************************************ 28. Trading results on "Tashkent" Republican Stock Exchange Essential Research Essential Research October 6, 2008
The sum of the transactions was 3.3 thousand USD, number of issuers the stocks of which were traded was 3, and the share of secondary market was 100 per cent. These are the results of the market in RSE "Tashkent" for the day. The largest market turnover belongs to stocks of "Vzryvprom" ("Explosion industry"). The sum of transactions on stocks of this issuer was 2.7 thousand USD. The deal price was 18.8 USD, i.e. face-value. This purchasing is the largest one according to the results of the day. Investors purchased 7.35% of authorized capital by the price mentioned above. The authorized capital of this joint stock company is 37.6 thousand USD. According to the adopted changes in law "Of joint stock companies and protection of
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stockholders' rights", the minimal size of authorized capital should be 50 thousand USD. This change will come to the effect in the beginning of 2009. Taking into account this amendment to the law, it can be supposed that "Vzryvprom" will increase its authorized capital by at least 12.4 thousand USD by the end of the year.
According to the results of the day the stocks of one of the leading banks "Pakhtabank" (30% belongs to the Ministry of Finance of Uzbekistan) were most actively traded. Investors purchased 616 common stocks of this bank by 0.79 USD. For the moment the capitalization of the bank is about 39.4 mln USD. Since the beginning of the year the stocks of this bank are the most active participants of trade sessions in RSE "Tashkent". The sum of transactions since the beginning of the year on stocks of "Pakhtabank" was 11 mln USD, this is almost 16% of total market turnover for 9 months of 2008.
Today three out of three stocks were in fall. The largest drop belongs to common stocks of "Vzryvprom" - 8.06%. The other securities lost more than 0.5%. Thus common stocks of "Pakhtabank" fell in price by 0.41%, and stocks of "Uzelektromontaj" (as of February of the current year 30% of this company belongs to private investor Kuchkarov Nugman) fell by only 0.13%.
82% of total market turnover belongs to the deal on stocks of "Vzryvprom". The second place is occupied by banking sector. The share of deals with stocks of "Pakhtabank", the only representative of banking sector, was 15%. --************************************************************ 29. Transit times decline for landlocked countries bne bne October 6, 2008
Landlocked developing countries have continued to increase the efficiency of their transit operations, but the high costs of international trade remain a significant barrier to their full integration into the world economy, UN under-secretary-general Cheick Sidi Diarra has said.
Speaking after the high-level meeting on implementation of the Almaty Programme of Action on landlocked developing countries, Diarra said that priority areas of concern included the need to improve policies on customs and bureaucracy fees; infrastructure; improving trading opportunities; and increasing technical and financial international assistance.
However, he noted that in 2007 only 49 days had been spent on export, down from 57 in 2006, and 56 days on import, down from 72. In addition FDI to landlocked development countries has more than tripled over the last five years, from $3.9 billion to $14 billion, although it constituted just 0.8 per cent of global FDI, and
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flowed primarily to a few resource-rich and economically more advanced landlocked developing countries, Diarra said.
--************************************************************ 30. Uzbekistan: EBRD to fund PET producer Tarleplast bne bne October 6, 2008
The EBRD is to provide a $4.6m loan to support Uzbekistan's largest PET producer Tareplast, a subsidiary of Plasteks. The Tashkent-based company produces PET packaging products, producing PET pre-forms, caps and polyethelene film. Tareplast plans to install two additional production lines and start buying its raw materials directly from suppliers, in response to increased demand for its products as purchases of non-alcoholic beverages grow strongly.
Eurasia Caucasus --************************************************************ 31. Azerbaijan: GDP per capita to reach $5.600 by end 2008, says policy commission head bne bne October 6, 2008
GDP is expected to reach $5,600 per capita in Azerbaijan by the end of this year, Ziyad Samadzade, head of the standing parliamentary commission on economic policy, has said. If Azerbaijan manages to sustain its high rates of economic growth, GDP per capital could reach $10,000 within the next give years, Trend Capital quoted Samadzade as telling a meeting of the Caspian Integration Business Club. "During last five years the high development rates of the Azerbaijani economy have been exceeding the indices of CIS countries and all countries in the world," Samadzade said.
--************************************************************ 32. Bank of Georgia CEO purchases shares in open market Renaissance Capital Renaissance Capital October 6, 2008
Event: Bank of Georgia CEO, Irakli Gilauri, purchased 7,384 Bank of Georgia global depositary receipts (GDRs) on the London Stock Exchange on 1 Oct, according to a 3 Oct disclosure by Bank of Georgia. The market price on 1 Oct was $6.65 per GDR.
Action: Neutral for Bank of Georgia, in our view.
Rationale: The spirit of the action is clearly positive. However, at around $49,000 total assumed transaction value, it would be too small to have an impact on the share price. --************************************************************ 33. Georgia: Commercial banks' assets up 26.45% in 8M08 Galt & Taggart
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Galt & Taggart October 6, 2008
According to the data released by the National Bank of Georgia in 8M08, assets of Georgian commercial banks grew to GEL 8.2bn, up 26.45% y/y. Total shareholders' equity rose to GEL 1,830mn, up 55.29% y/y. Total loans increased to GEL 5.49bn, up 39.36% y/y, while total deposits rose by 9.52% y/y, to GEL 3.6bn. In 8M08, total banking sector net income decreased to GEL 67.46mn, down 12.51% y/y. The leading Bank by total assets was Bank of Georgia with GEL 2.67bn in assets. Bank of Georgia also accounted for 70.87% share of Georgian banking sector's net income with the net income of GEL 47.81mn, according to NBG's data.
--************************************************************ 34. Georgia: State budget expenditures GEL 4.31bn in January-July 2008 Galt & Taggart Galt & Taggart October 6, 2008
According to the latest data from the Georgian Treasury, expenditures of the State Budget in January-July 2008 were GEL 4.31bn.
Funding of labor, public health care services and social welfare programs amounted to GEL 734.3mn, including GEL 434.7mn spent on pensions, compensations and state scholarships. Spending on public health care programs reached GEL 116.9mn, rehabilitation of medical institutions - GEL 4.9mn, compensation for social privileges - GEL 29.5mn, programs for the social support - GEL 65.2mn.
Spending on education rose to GEL 278.2mn, including funding of voucher programs - GEL 164.4mn and construction and repairing of schools - GEL 18.3mn, programs for supporting science - GEL 17.3mn, programs of higher education - GEL 23.5mn. GEL 45.9mn were spent by the Ministry of Culture, Protection of Monuments and Sports, including funding of the presidential programs - GEL 11.9mn, art programs - GEL 18.1mn, programs of cultural heritage - GEL 5.4mn. GEL 46.1mn was spent by the Ministry of Justice on prisons repair and maintenance.
--************************************************************ 35. Georgia: Stock and bond markets Galt & Taggart Galt & Taggart October 6, 2008
Last week the Galt & Taggart Index (GTI) fell by 23.06% to 253.6 in GEL terms on a trading volume of GEL 4,540. Seven different stocks traded on the Georgian Stock Exchange with two blue chips among them: Bank of Georgia (GEB, Buy, down 30%) and People's Bank (AMB, up 27.27%). Blue chip stocks accounted for 20.88% of the total weekly trading volume.
Last week Bank of Georgia's global depositary receipts (GDRs) fell by 11.6% on the London Stock Exchange (LSE: BGEO) to US$ 6.45. Total of 920,144 GDRs traded on LSE last week.
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--************************************************************ 36. Georgia: Tskhinvali car bomb kills seven bne bne October 6, 2008
A bomb exploded on the premises of the Russian peacekeeping forces headquarters in Tskhinvali Friday October 3 killing seven Russian peacekeepers, according to newswire reports. The bomb was planted inside one of two cars seized near a village in Georgia the day before and brought to the headquarters for examination. Those killed in the blast include the chief of the joint peacekeeping staff for South Ossetia, Ivan Petrik.
--************************************************************ 37. Georgia: Communications regulator fines Russian broadcasters bne bne October 6, 2008
The Georgian National Communications Commission (GNCC) has fined Russian Public Broadcaster and state-owned radio station Vesti FM for illegally operating in Georgia, according to reports in the Georgian press. The GNCC claims the two broadcasters were carrying out unauthorized broadcasting and use of radio frequencies in Tskhinvali, Gori and nearby areas. Each has been fined GEL50,000 and ordered to immediately stop illegal operations in Georgia.
--************************************************************ 38. Russian troops begin withdrawal from Georgia bne bne October 6, 2008
Russian forces have started dismantling their posts within Georgia as they prepare to withdraw from the security-zones they have established inside the country. Both Georgian officials and the chief of the EU Monitoring Mission in Georgia have confirmed that Russian troops are preparing to leave. Russia agreed to withdraw its forces from Georgia by October 10 under the terms of the EU-brokered ceasefire agreement.
--************************************************************ 39. US to open market to Georgian products Galt & Taggart Galt & Taggart October 6, 2008
The U.S. will open its market to 3,500 products shipped duty free from Georgia to support Georgia's economy following a five-day war with Russia, said Deputy U.S. Trade Representative John Veroneau.
The U.S. has already pledged at least US$ 1bn to Georgia, while the International Monetary Fund approved a US$ 750mn loan on September 15. The U.S. duty-free list
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of Georgian products allowed into the U.S. will also be expanded, said Veroneau. He was in the capital Tbilisi to discuss trade options with the Prime Minister and other government members.
Russia imposed a trade embargo on Georgian products such as wine, minerals and food and air links in 2006. However, the loss of the Russian market has prompted Georgian companies to expand and diversify their export markets.
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