Anti-Russia sanctions fueled Central Asian capital markets, expert says

Photo: Shutterstock, photo editor: Milosh Muratovskiy

Secretary General at Federation of Euro-Asian Stock Exchanges Konstantin Saroyan told Kursiv.media about positive and negative influences of anti-Russia sanctions on Eurasian stock markets.

Saroyan believes that a «particular flow of financial assets from Russia to other countries» occurred following Russia’s full-scale invasion of Ukraine in 2022. This situation served as a stimulus for the development of capital markets in the Central Asian states.

«Apart from everything else, this situation led to the development of expertise in these countries. For instance, specialists and experts from Russia began establishing companies and so on. Thanks to this, these countries saw an increase in professionalism in the stock market,» he said.

Among the negative aspects, Saroyan mentioned the tightening of bank compliance procedures. According to him, this has made cross-border payments slower and more difficult.

«If someone wants to invest in Kazakhstan and its capital market or the other way around, with someone from Kazakhstan wanting to invest in other countries, severe bureaucratic obstacles would come into play,» Saroyan said.

Another issue for stock markets in Kazakhstan and other post-Soviet countries is the low level of corporate governance, the expert noted. According to Saroyan, all these countries have developed under the same scenario since the dissolution of the Soviet Union, transitioning from a centrally planned economy to a market economy.

«Now, we must engrain collaborative governance in our DNA. There is also a need to enhance the financial literacy of Kazakhstani investors, as it is one of the crucial factors for development. The regulator is working on it, and other market players are trying to explain to investors what’s right, what’s wrong, where the risks lie and so on,» he summarized.

Earlier this week, Saroyan proposed introducing temporary tax incentives and enhancing cooperation with potential issuers to boost liquidity in Eurasian stock markets.