ASTANA – Investments in the bonds of the Kazakh Finance Ministry have soared to a historic high of 453 billion tenge ($1 billion), said Olzhas Igsatov, the head of the monetary operations department at the National Bank of Kazakhstan, the bank’s press service reported on Aug. 2.
According to Igsatov, investments of non-residents in the ministry’s government securities and the National Bank’s notes collectively increased by 178 billion tenge ($398.8 million) to 559 billion tenge ($1.2 billion) in January-July, which is a record since March 2022.
The presence of non-resident investors in notes increased by 6 billion tenge ($13.4 million), while in government securities there was an increase by 171 billion tenge ($383.2 million).
Last year, with an outflow of portfolio investments of non-residents from developing countries, Kazakhstan also observed a decline of 214 billion tenge ($479.5 million), noted Igsatov.
“This year, we see a reversal in international investors’ risk sentiment,” he said.
Igsatov recalled that a wide range of investors, including foreign, increases the efficiency of the government securities market. The influx of non-residents into government securities has a positive impact, given that the inflow of foreign portfolio investment allows to reduce the cost of borrowing, as an additional source of funding.
“To purchase government securities of Kazakhstan, non-residents must first buy the tenge by selling their currency on our market,” Igsatov explained.
Since the beginning of the year, non-residents have sold about $400 million, which offered additional supply in the foreign exchange market.
Foreign investors also generate interest because of the active communication policy of the National Bank and the Finance Ministry that have held several meetings since the start of 2023, highlighting the prospects and attractiveness of the domestic government securities market.
Currently, work is underway to introduce a system of primary dealers in the public debt market, which will be an additional step in developing the market and increasing its liquidity.