The opening could lower the country’s borrowing costs and diversify its investor base. We saw similar for Peru not too long ago.
This is great for Kazakhstan which is Central Asia’s biggest energy producer.
A more vibrant domestic capital market can pave the way to more resilience to global economic shifts.
Moreover, Western investors continue to hunt for that all elusive alpha and this move will really help them tap into this market’s potential more easily.
More instrument diversification and the chance for investors to have more control and visibility over their investments goes a long way to helping the investment decision process.
On the flip side, Finance Minister Bakhyt Sultanov commented in an interview with Bloomberg: “There’s a risk that with the entry of foreign investors, local bonds will become more volatile, but we’ll take steps to level out this volatility.”
Overall, this development echoes our efforts in Russia not so long ago. Here, we helped to liberalise the bond-market at a time when global stimulus had driven investors elsewhere.
Bloomberg notes that “The Russian deal, in 2013, drove down the government’s borrowing costs as foreign ownership surged.”