How Coronavirus Has Changed Capital Market in Uzbekistan

The age of the Covid-19 crisis opened up a way to new opportunities

According to an edict of the Uzbekistani president on measures to support people and businesses in the time of coronavirus pandemic, the deadlines for shareholders meetings and audits were changed from June 30 to September 30.


As Evgeniy Mozheiko, CEO of Freedom Finance in Uzbekistan said in an interview to Kursiv, an extension of the period for companies’ records might «affect the disclosure of annual information of issuers. As a result, the market is experiencing information hunger for investment decisions, and this will reduce the turnover of securities.»

According to Mozheiko, his office sent a letter to the Uzbekistan Capital Market Development Agency (CMDA) suggesting to hold Issuer Days online.

«Issuers, together with the State Assets Management Agency (AUGA) and the Republican Stock Exchange“Toshkent» would talk in real-time about what their results, prospects, how they work during quarantine, and so on,” Mozheiko stated.

The agency responded very fast by recommending to all joint-stock companies officially listed at the Toshkent exchange and professional securities market participants to hold Issuer Days regularly.


Other dates for reports were not the only changes in the age of pandemic. The work of CMDA has also changed. For now, all documents the agency receives should be exclusively digital. In order to soften the negative impact of these limits that the agency was forced to set on, the special online poll for capital market actors was initiated.

The Uzbekistani Agency has also announced its cooperation with the International Organization of Securities Commissions (IOSCO). The two entities want to sign a memorandum.

«The signing of the memorandum is a statement by Uzbekistan to large international investors that they should not be afraid to enter our securities market, it’s transparent and protected from illegal operations and violations,» CMDA Deputy Director Tursun Makhkamov stated.

The changes also affected the operation of AUGA. However, according to experts, this only benefitted the structure.

Karen Srapionov, financial analyst and partner of Avesta Investment Group, said that «the State Asset Management Agency is testing an online participation system at meetings. Talk about this went on for many years. I hope that the current situation will allow us to abandon the many excessive and outdated reporting forms, convert many documents to digital form and make it clear that there is no harm and significant risks from simplifying the administration processes.»

The shift to digital can be a good impetus for development, as previously, professional participants and issuers had to spend a lot of time and effort on excessive bureaucracy, he added.


Since the beginning of 2020, over 13,000 transactions worth 106 billion so’m ($10.5 million) have been recorded on the Toshkent exchange. From January to April 2019, 14,190 transactions were concluded for 70.7 billion so’m ($8.3 million at the Central Bank rate as of April 30, 2019).

Karen Srapionov believes that the nominal volume of the market this year has grown mainly due to several large transactions. In January, two issuers accounted for about 52 billion so’m ($5.1 million). The volume of trading in securities of Hamkorbank reached 42.1 billion so’m ($4.2 million), and the volume of corporate bonds of O’zsanoatqurilishbank reached 10.04 billion so’m ($1 million). But in general, according to the expert, there is a reduction in the business activity of many investors, primarily foreign ones. Moreover, this was noticeable even before the coronavirus pandemic.

«The unpredictability of the foreign exchange policy has become a significant test for many. Seeing the situation with the tenge and the ruble, many investors realized that the Uzbek so’m could plummet. In this situation, any investor will hold back with the decision to transfer their money to Uzbekistan and convert from dollars to so’m,» Karen Srapionov noted.

However, according to the expert, with a plummeting of the exchange rate, new investors will receive a significant discount on the purchase of Uzbek shares, since prices did not respond to a decrease in liquidity and a change in the exchange rates.
Scrapionov believes that a decrease in activity is also connected with new opportunities in other markets.

«Few people want to spend their time considering growth opportunities in Uzbekistan when the simplest gold or uranium tools can provide good results,» Srapionov said.


Assessing the growth prospects of the trading turnover on the stock exchange in Uzbekistan, Evgeny Mozheiko from Freedom Finance of Uzbekistan, noted that success could be achieved with help of new tools such as options and futures.

As an experiment, Uzbek Central Securities Depository (CSD) is able to establish correspondent relations with a neighboring Kazakhstani CSD to resolve the issue of a double listing of foreign securities, which will lead to an increase in liquidity and turnover of the exchange.


Interesting opportunities in the capital market should appear when a situation with currency would be clear. This can help revitalize the overall picture, experts say.

Despite the shrinking of economic activity because of the pandemic, there are industries in Uzbekistan that continue to work. Moreover, some sectors even show growth and thereby attract investor’s attention.

As an example of areas for investment, EvgenyMozheiko offered shares of Quartz JSC and Kyzylkumcement JSC.

In his turn, Karen Srapionov would prefer “shares of companies that have the ability to export or increase prices for their products in the domestic market and a low share of imports in the cost structure.”

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