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 businessneweurope.eu 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 businessneweurope.eu 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