CEO OF TASHKENT STOCK EXCHANGE
Finance I Interview I Uzbekistan 2023
_BIOGRAPHY He holds an MBA degree from the University of Michigan Ross Business School and BA in Economics with Distinction from the Tbilisi State University. Previously to his current position at RSE, he has been appointed as CEO of the Georgian Stock Exchange and the Chairman of the Supervisory Board of the Georgian Central Securities Depository (GCSD) in November 2014.
“WE WANT TO ATTRACT HIGH-QUALITY ISSUERS TO THE LOCAL MARKET. FOR THAT WE ARE ENGAGED WITH THE STATE ITSELF AND WITH SOME OF THE LARGER STATE-OWNED COMPANIES (SEOS).”
CAN YOU PROVIDE AN OVERVIEW OF THE CURRENT STATE OF THE TASHKENT STOCK EXCHANGE?
Over the past 5 years, the turnover of the Republican Stock Exchange "Toshkent" (RSE) has been steadily increasing, reaching its maximum point by the end of 2022. At the end of the year, the total volume of trades on the stock exchange reached U$436 million, an increase of 282.1% compared to the previous year. There was also a positive trend in terms of the number of executed trades, and this indicator increased by 12.9%. By the end of the 1st quarter of 2023, the total volume of stock exchange transactions was almost U$152 million. OTC market trading platform was launched on January 30, 2023 and by the end of the 1st quarter 2023, the volume of trades carried out on this trading platform reached more than U$2.5 million.
As of April 1, 2023, there were 112 issuers listed on the exchange, out of which 108 issued shares, 3 issued both shares and bonds and 4 issued only bonds. Currently, the total market capitalization of 108 share issuers is over U$11 billion. The issuers with the highest market capitalization are JSC "Uzbektransgaz" with U$2.74 billion and JSC "UzAuto Motors" with U$1.53 billion.
HOW DO YOU ATTRACT FOREIGN INVESTMENT AND PROMOTE UPCOMING IPOS?
RSE is trying to improve the capital market infrastructure along with promoting upcoming IPOs. The infrastructure development process is mostly composed of enhancing the technical system of the stock exchange which enables market participants to trade through a user-friendly platform. The exchange is also keeping day-to-day contact with professional market participants to get their feedback on how the performance can be enhanced and how the exchange might be of assistance in any challenges they are facing. We believe attracting foreign investors starts with building the right capital market infrastructure to enable International CSDs (ICSDs) enter the market which in turn facilitates access of foreign investors to the local market.
At the beginning of 2023, RSE met with the delegation of Clearstream in Tashkent to facilitate access of international portfolio investors to a local securities market in Uzbekistan by creating a link with ICSD. In parallel, we launched negotiations with various global custodians and are continuing to take steps in multiple directions to improve market access for investors. We hope that next year, plenty of foreign investors will be present in our market as a result. The regulator of the capital market, the Ministry of Economy and Finance is also actively engaged by helping issuers become more transparent and improve their corporate governance. In addition, RSE is organizing training programs and seminars to enhance the financial literacy of a wider population.
WHAT ARE THE MAIN OPPORTUNITIES FOR COMPANIES LOOKING TO RAISE CAPITAL THROUGH THE EXCHANGE?
By running an organized and rules-based market for companies to raise capital, the RSE helps to drive growth and investment in the country. One of the primary ways that the RSE supports local businesses is by facilitating initial public offerings (IPOs) and secondary public offerings (SPOs) of companies looking to raise capital. Through the IPO process, companies can sell their shares to the public and raise funds that can be used to invest in new projects and grow their businesses. In addition, by enabling securities’ trading on the secondary market RSE plays an important role in providing liquidity to investors and making price discovery easier. Overall, the RSE plays a key role in supporting Uzbekistan's economic development by facilitating the flow of capital to where it is needed most, and it assists foster the growth and prosperity of the country.
Today, our main challenge is the lack of liquidity, like in many frontier markets. This is due to the tiny free float, underdeveloped domestic investor base and a very low participation rate of retail investors. Uzbekistan is facing challenges related to capital market infrastructure. We still need to improve our trading, clearing & settlement systems and processes, as well as establish links with ICSDs such as (for example) Clearstream or global custodians in order to enable foreign investors access local market. We want to attract high-quality issuers to the local market. For that we are engaged with the state itself and with some of the larger state-owned companies (SEOs). We hope to persuade them to commit to improvements of their corporate governance and transparency standards, and to appoint independent members to supervisory boards, as well as audit committees.