ASTANA – Stocks aren’t a cultural element in Kazakhstan as in the U.S. and many other Western countries. Experts and private investors, however, consider that the situation should be slowly changed and regular people should start to learn more about investments in Kazakh securities, because it is safe and very profitable.
Dmitry Smirnov, Vice Director of the Physical Bodies Department of Freedom Finance, a major investment company in Kazakhstan and Russia, discussed the situation.
“People in Kazakhstan invested their monetary funds in real estate, bank deposits and their own business for a long time. Even today, investment culture is low. There are many reasons for this: the absence of experience, nascence of financial instruments, bad experience of investment in economic ‘bubbles.’ We have learned to earn, but only a few people correctly invest their money. As of today, the situation is slowly changing. People discover new instruments and begin to use them,” he said.
Smirnov also spoke about the reasons for the sluggishness in Kazakh securities investment.
“We need time for stock market development. There is a lack of people who earned money in investment equities, who worked with stocks one way or another. First of all, we need good investment stories. People in Kazakhstan should know that their friends and relatives earned a lot of money investing in equities to buy shares for themselves. Also, the companies should know that it is very profitable to get money for their own projects in the paper market. Our company is going to present shares of BAST company in the near future. It will be the first such story in our market.”
Smirnov is sure that a middle-class Kazakh citizen without corresponding education and skills can invest money in stocks.
“Everybody should make investments. Your money must work for you. You should have passive income, which is more than paper money inflation and low to moderate risk. You should always have a safety cushion if you don’t earn your basic income or for any other unforeseen circumstances. Travelling abroad or the purchase of an apartment for your children for money which was easily earned is real, if you invest a minimum 10 percent of your income using different financial instruments.”
Smirnov is sure that there are no guarantees that you won’t lose you money if you invest in equities, which is a risky kind of activity.
“But because of the risks, such investments enable [the person] to get high income. In fact, everything is easy. You don’t need to have special knowledge and corresponding education to invest. Everything you need is to understand the situation in general and your own strategy; for example, to buy different shares during 10-15 years for 10-15 percent of your annual income. Believe me, the aggregate result will gladden you.”
Smirnov also advises preparing an investment strategy.
“First of all, you need to understand and decide what you need. After that, you should contact an investment company. The stock market has a lot of interesting instruments and everyone can find exactly what he needs. You can get fixed income buying bonds. You can invest in precious metals and so on and you can do this using one account.”
Smirnov recommends investors be wary of passion and greed.
“Very often people want to get high yield, but this makes them crazy. They want to earn more and more, but it makes them risk too much. Don’t seek big money, follow your investment strategy. It is very important to be disciplined and know how to make decisions.”
Smirnov noted his company provides the opportunity to invest in foreign markets and takes advantage of all available information.
“We provide access to the stock markets of Kazakhstan, Russia, the U.S. and other countries, give an advisory opinion and furnish trust management services. We produce investment ideas for our clients and suggest to them when and what they should buy or sell. We get access to unique IPOs (our company participated in Alibaba, Virgin America, Facebook and Hilton IPOs), where our clients earned well. I am referring to 30, 40, 50 percent and more in a few months.”
Smirnov advises arming yourself with patience if you are a participant in Kazakhstan IPOs. He feels that KEGOC shares show depreciation, because a major number of people who wanted to buy shares did so. As of today, there are no buyers in the market. KazTransOil shares were purchased by United Pension Savings Fund, but now the fund invests in other fields. That is why investors should wait for buyers, earnings per shares and good news.
Aubakir Arstanbekov is a graduate of KIMEP University, the leading independent North American-styled academic institution in the Commonwealth of Independent States (CIS). He majored in finance and earned an MBA from Kazakh British Technical University. Arstanbekov worked in the auditing department of KPMG LLC, then for Samsung Electronics, and currently works as key channels manager at Sony Electronics, managing sales and marketing with major Kazakh electronic retailers.
“Since KIMEP, I’ve been interested in finance and economics. I have read lots of books and articles. I practiced securities trading with the STOCKTRACK trading simulator and won the prize for ‘largest gain for 6 months.’ I started to invest since KIMEP – I’ve played on FOREX and invested in the New York Stock Exchange. Now, I also have several investments in international companies (mainly America and Asia). My decision to invest came with overall interest in this sphere together with my finance education,” he said.
Arstanbekov strongly recommends investing.
“For ordinary people, investing in securities may give an additional source of huge profit, since securities are almost unlimited in terms of possible gain. The percentage of profit is much higher than deposits (approximately 10 percent). Investing in real estate requires a much bigger investment than securities and requires personal involvement in all issues, such as purchasing real estate, reconstruction, maintenance, renting, whereas investing in securities requires minimum personal involvement. At that, investing in securities could be very profitable, but risky at the same time. The market is volatile; different news and accidents could significantly affect stock price. Loss could be as big as initial profit. An investor should be in the swim to constantly monitor prices and news.”
Arstanbekov outlined some suggestions for investors.
“I have successfully invested in Chinese companies. I would recommend investing in securities if a person has free capital. You need to plan all your expenses ahead; if you realise you have some capital to invest, you need to choose the best company and broker. After a decision is made, a person needs to carefully study all possibilities and consult with a financial manager. The manager could advise interesting stocks for investment and share some insights and analysis. As for me, I am planning to expand my investments into Chinese companies,” he said.