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Eurasian Business Briefing Uncategorized

Indian Railways gives new push to North-South Transport Corridor

Indian RailwaysState-owned Indian Railways is to host a meeting of the heads of its fellow South Asian railway companies next week to discuss the possibility of pushing forward the development a transcontinental rail freight service that would run through Iran and Turkey. If the 6,000 km project were to be realised, (more…)

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Kazakh banking consolidation continues with Halyk and Qazkom in merger talks

Qazkom BankHalyk Bank logoThe ongoing consolidation of Kazakhstan’s banking sector could be about to undergo a major step change after it emerged that two of the country’s largest financial institutions, Halyk Bank and Qazkon were in merger talks. If successful, the new bank would command 38% of the country’s total bank assets (around $30bn) and have a combined loan base of approximately $20bn.
A rationalisation of the sector has been under way since 2015 when, with almost all of Kazakhstan’s banks still coming to grips with the fallout from the financial crisis of 2008/9 which left them grappling with weak balance sheets and a large number of non-performing loans (NPLs), the sector began coming under added pressure from the slowdown in the Chinese and Russian economies and plunging oil prices. Real GDP growth dropped from 4.3% to 1% and in August 2015 the authorities in Astana decided to float the tenge, causing its value to drop by 30% overnight,.
The devaluation impacted on all the country’s banks with Qazkom’s woes compounded by its acquisition of the nationalised BTA Bank (whose NPL rate stood as high as 89%) earlier in the same year.
Following government intervention, principally through the launch of a $2.8bn fund to help its banks tackle the problem of their ever-present NPLs, the National Bank of Kazakhstan (NBK) last year introduced new rules forcing them to raise their equity-deposit ratio and to increase the maximum permissible tenge deposit rate from 10% to 14%. Having also signed up to the Basel III regulatory framework accord (the global voluntary regulatory framework that calls for participating countries to strengthen their banks’ capital requirements by increasing liquidity and decreasing leverage) it then demanded that they raise their minimum equity levels to $300m – a 1000% increase – by 2021.
With only a handful of banks (including Halyk and Qazkom) currently meeting those requirements, the NBK’s policy was bound to trigger a wave of mergers and acquisitions. In the same year that Kazkommertzbank bought BTA, Forte Bank executed a reverse merger the Alliance and Temir banks, while the Eurasian Bank took over BankPozitiv.
Following news of the possible merger shares in Halyk Bank fell by 11.4% percent and those Qazkom increased by 6%.

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Kazakhstan to increase Silk Road container capacity tenfold by 2020

Minister of Investment and Development Zhenis KassymbekKazakhstan has signed up to increase the volume of container shipments that it processes on the new Silk Road between China and Europe from a current yearly total of 70,000 this year to 800,000 by the end of the decade, (more…)

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Alrosa launches Eurasian Diamond Centre in Vladivostok as Eastern Economic Forum gets under way

Eastern Economic Forum VladivostokAlrosa, Russia’s largest diamond mining operation, launched the Eurasian Diamond Centre in Vladivostok yesterday to coincide with the opening of the second Eastern Economic Forum tomorrow, when representatives from more than 200 (more…)

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New World Trade Outlook Indicator launched to aid short-term forecasting

World Trade Outlook IndicatorIn an attempt to improve real-time global economic forecasting, the World Trade Organization (WTO) last week launched its World Trade Outlook Indicator (WTOI), WTO said on Friday. Designed to give an early signal of the current and short-term direction of world trade and its near future, the WTOI should be able (more…)

ITAR-TASS Read More»

State-owned enterprises driving Chinese FDI, SASAC chief reports

SASAC Director Xiao YaqingChinese FDI: State-owned enterprises (SOEs) are driving the accelerating pace of Chinese overseas investments, according to a report compiled by the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC) and (more…)

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Southern Gas Corridor on track for 2018 with SD2 over 70% complete

rig being towed out to Shah Deniz 2Half of the $42bn that Azerbaijan’s mammoth offshore Shah Deniz 2 (SD2) gas field is expected to cost has now been spent and over 72% of its development complete, the head of the investment department at Azerbaijan’s state oil company SOCAR Vagif Aliev told a press conference this week. Gas extraction from SD2 is on track (more…)

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SOCAR Polymer project secures $3.5bn international funding package

SOCAR PolymerAzerbaijan has secured international financing to the tune of $3.5bn for the development of the massive SOCAR Polymer gas chemical complex after SOCAR this week signed an MoU with Gazprombank and (more…)
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North-South International Transport Corridor scheduled to link Mumbai to Moscow via Azerbaijan by August

North South Transport CorridorMumbai to Moscow:  The first cargo train to make the journey from India to Russia via Azerbaijan on the new North-South International Transport Corridor will set off in August, the Chairman of the Azerbaijan Railways Javid Gurbanov said this week. From Mumbai, (more…)

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Russian Europan oilfields will start running out by 2040s, expert warns

Platform at Sakhalin 1 oil fieldRussian European oilfields will start running out in the 2040s giving it no more than 25-30 years to replace it with oil production from the Arctic a leading expert warned this week.
By then, Russia will see a steady decline in oil production from its European fields, the Research Manager of the Institute of Geology, Oil and Gas of Russia’s Academy of Sciences Alexey Kontorovich told delegates at the Technoprom forum on technological development in Novosibirsk, and while Western Siberia would maintain production longer, it would not be enough to meet the country’s economic needs. Its Arctic fields were therefore going to be essential for Russia to ensure its sustainable economic development. 

ITAR-TASS Read More»

Fosun Group planning $1.7bn Sanya Atlantis resort for Hainan

Sanya AtlantisSanya Atlantis: China’s Fosun Group conglomerate is planning to invest almost $17bn in a massive marine tourist project in Sanya in the southern province of Hainan , according to a report posted on yesterday. The 530,000m² (more…)

chinadaily Read More»

Chinese M&A hits new high

SyngentaChinese M&A: Despite Beijing’s attempts to tighten control of capital, Chinese outbound investment in the form of mergers and acquisitions hit a new record of $111bn for the first five months of this year, already smashing (more…)

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Russia extends ban on Turkish food imports to complete embargo

Turkish tomatos in RussiaTurkish food imports: The Russian heath and safety watchdog Rosselkhoznadzor this week effectively put a ban on all Turkish fruit and vegetable imports after extending the existing embargo to zucchinis, (more…)

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101 Kazakh mineral deposits to be put up for auction

Gold mining in KazakhstanKazakh mineral deposits: The Kazakh government is to hold an auction over 100 mineral deposits in June, its Deputy Minister for Investment and Development of Kazakhstan Albert Rau said today. The auction will include: (more…)

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Uzbek GDP grows 7.5% in Q1

TashkentUzbek GDP grew by 7.5% between January and March compared to the same quarter in 2015, the government’s press service is reporting. It put the rise down to the ‘effective measures’ taken by Tashkent to (more…)

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Russian billionaire Yuri Milner pumps $100bn into Breakthrough Starshot

Yuri Milner and Stephen Hawking at Break Starshot press conference 12-04-16Breakthrough Starshot: Russian billionaire internet investor Yury Milner has joined forces with the world-famous physicist Stephen Hawking and Facebook founder Mark Zukerberg to launch a revolutionary $100m project to construct a robot research spacecraft capable of covering a distance of 4.37 light years – the distance between Earth and our closest star system (more…)

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World Bank predicts Central Asian stagnation and urges cooperation

The Caucasus and Central AsiaCentral Asian stagnation: The economies of Europe and Central Asia continue to face difficult headwinds in an increasingly complex and uncertain global economic environment, with short-term prospects differing substantially across countries, according to a new report from the World Bank that was published yesterday.
Following a contraction (more…)

Times of Central Asia Read More»

S&P confirms Russia’s long-term foreign currency rating as BBB-

Standard & Poor'sStandard & Poor’s this week confirmed Russia’s long-term foreign currency rating at BBB- and its sovereign credit rating at BB+. The agency also kept the country’s short-term foreign currency rating at B and rouble’s at A-3, and is also forecasting the GDP will decline by 1.4% this year and grow by an annual average of 0.5%between 2016 and 2019.

ITAR-TASS Read More»

Tehran refuses to join freeze until Iranian oil production hits 4m bpd

Bijan Namdar Zangeneh Oil Minister Iran

Bijan Namdar Zangeneh Oil Minister Iran

Iranian oil production: Iran will not consider joining Russia and Saudi Arabia in their plans to put a cap on oil production until the country’s output reaches four million barrels a day, its Minister of Petroleum Bijan Zangeneh said over the weekend. “I have already (more…)

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Gazprom cuts private sector Turkish gas supplies by 10% over price dispute

Turks around a fireTurkish gas: Russian energy giant Gazprom has reduced natural gas supplies to private sector companies in Turkey by 10% due to a price dispute, officials at Turkey’s energy ministry told Reuters on Thursday. The cut came after Turkish companies (more…)

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