ASTANA — The second day of Astana Finance Days 2025 opened with a plenary session titled The Role of Portfolio Investments in Strengthening Central Asia’s Financial Markets at the Astana International Financial Centre (AIFC) on Sept. 5. This strategic session focused on the contribution of portfolio investments to accelerating the development of Kazakhstan’s financial market and supporting economic diversification.
Plenary session at the AIFC on Sept. 5. focused on the contribution of portfolio investments to accelerating the development of Kazakhstan’s financial market and supporting economic diversification. Photo credit: AIFC press service
Participants discussed how growing portfolio flows can enhance public debt management, foster a domestic IPO pool, and facilitate joint investment instruments with international partners. The session also covered regulatory reforms, clearing and settlement infrastructure, and strategies to position Kazakhstan’s capital market as attractive to long-term global investors.
Inflation confidence requires government, market, and investor collaboration
The Governor of the National Bank of Kazakhstan Timur Suleimenov emphasized the regulator’s core role in maintaining market stability. He noted that, in collaboration with the government, the central bank works to ensure macroeconomic stability and make the country appealing to investors.
Suleimenov stressed that coordinated action across the state, society, and markets is crucial to build confidence among investors that inflation is temporary. Photo credit: AIFC press service
“This is not an easy task: sometimes growth is too fast, other times it does not match the economy’s potential. It is not always a science. Sometimes it is an art. But together with the government, I believe it can be achieved. We have a healthy and robust inflow of investments, and overall, our macroeconomic indicators are strong. We must maintain a long-term perspective to ensure sustainability and inclusivity,” Suleimenov said.
He also addressed inflationary pressures, highlighting a paradox in market expectations. Using Russia as an example, where the key rate is 21% despite the ongoing war, yet three-year government bonds trade at 16%, he contrasted this with Kazakhstan, where the key rate is 16.5% and bonds trade at 16.5–17%.
According to Suleimenov, in Russia, investors are willing to hold bonds at yields below the key rate, signaling confidence that inflation will be brought under control and that no additional “risk premium” is needed despite the war and extreme instability. In Kazakhstan, by contrast, investors are demanding a premium, reflecting their skepticism that inflation will decline to the 5% target.
“The Ministry of Finance places securities for the same terms. This means that, looking ahead, investors are building in a premium because they do not believe that inflation will be reduced to a sustainable level, which we consider equal to 5%,” Suleimenov said.
He stressed that coordinated action across the state, society, and markets is crucial. Confidence must be built that inflation is temporary and will reach its target.
“Once that confidence is established, the base rate and market yields will decline, and the premium investors are building in today will prove excessive. Ultimately, we aim to reach a level of around 12%. Achieving this requires coordinated efforts: from the government, the investor community, and the central bank. We should avoid signaling that inflation will remain high, because doing so only reinforces expectations of inflated yields, which are not justified under sustainable macroeconomic fundamentals,” he explained.
Building on Suleimenov’s remarks, Timur Turlov, head of Freedom Holding, highlighted why Kazakhstan is well-positioned to achieve its inflation targets. He pointed out that the country’s open capital market, investment rating, and recent structural improvements in the government bond market provide a strong foundation for controlling inflation expectations.
“Now, the issuance of our government bonds is much more consolidated and structured than, say, five years ago. We have market makers who can ensure local settlements, settlements through AIFC, through international systems, European settlements—any way you want. And all this has appeared literally over the past two years,” Turlov said.
He emphasized that these developments directly reinforce monetary policy. He expressed confidence that increasing competition in government bond pricing will ultimately help the Ministry of Finance reduce its borrowing costs, which, in his opinion, strengthens inflation management.
“I really believe that we have a chance to achieve our inflation targets. I am confident that government bonds are now trading, perhaps not entirely fairly. For example, someone buys seven-year bonds with a yield of 17% and earns huge money. But over time, inflation will slow down,” he said.
“Despite strong monetary positions, including the country’s reserves, national fund, corporate reserves, and private reserves, the market has everything it needs to remain consolidated. Of course, monetary policy always requires adjustments, and different scenarios are possible. But in my opinion, all conditions exist to achieve inflation reduction goals,” Turlov added.
Independent asset managers and capital market reforms drive opportunities
The Assistant to the President of Kazakhstan on economic issues Kanat Sharlapaev emphasized that economic diversification is showing results, with oil and gas becoming less dominant drivers of GDP. He also noted the importance of attracting more market participants and encouraging independent asset managers to provide varied perspectives on assets.
Sharlapaev emphasized that economic diversification is showing results, with oil and gas becoming less dominant drivers of GDP. Photo credit: AIFC press service
“The market operates on the principles of supply and demand, and from Kazakhstan’s perspective, the situation across assets looks quite positive. There is independence and a diversity of viewpoints, and independent asset management plays a crucial and healthy role in the continued development of our financial markets,” Sharlapaev said.
Returning to market opportunities, Turlov highlighted Kazakhstan’s unique regional position, underpinned by its open capital market and investment-grade rating.
“We have helped issuers attract nearly $2 billion through local placements alone over the past two years. For the first time in history, demand from local investors exceeded supply. Previously, it was the opposite—we had to persuade the local market to buy. Now demand outstrips supply, and this represents a significant shift,” he shared.
He noted that few countries can attract billions through local equity placements while securing a substantial portion of demand from retail investors, giving Kazakhstan a clear advantage.
“We are an open country for capital with an investment rating. In such a large region, we are the only ones with this combination. China does not have an open capital account, and other countries lack an investment-grade rating. This attracts capital from around the world. Kazakhstan is becoming a relatively affordable financial center for the middle class and conservative foreign clients who want to preserve and diversify their savings. We see this demand, and I can see that AIFC is helping to bring it to fruition,” Turlov concluded.
