Kazakhstan Is The New Black by Sara Grillo, CFA, President at Grillo Investment Management
I’m writing this blog because I am tired of Kazakhstan getting wrongfully lumped together with the other “-Stan” countries ( Afghanistan, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan). It’s not fair. Not all the “Stan” Countries are the same! In addition to having lovely sites such as Bayterek monument, pictured above, Kazakhstan is the most upwardly mobile of the “-Stan group” and is on its way to becoming a world player.
The entire investment community overlooks countries like Kazakhstan in favor of countries that they know more about, such as Europe (debt ridden), China (overhyped), and Japan (one foot in the grave). But if you look at where capital is going, you will see that this country is where a not insignificant amount of capital is now flowing. A word of caution to all of you out there who think I’m giving out free investment advice. I’m not. Investing in Kazakhstan is not for the weak-hearted – so be sure to do your own research.
Kazakhstan caught the world’s attention when it nestled into the ranks of other cosmopolitan cities such as Milan and Shanghai with selection of Astana as host of Expo 2017 with a theme of “Future Energy.” It has historically been the first man on the beach out of all the former Soviet countries, being awarded an investment grade credit rating and named the host of a major international event. Although in the past its fossil fuels and agriculture have stood out as major economic strengths, the country has diversified into other sectors such as transportation, telecom, and petrochemicals.[i] It has recently upgraded its infrastructure, boosted investment in small businesses, and pioneered the “eco-taxi” in its capital. It’s making motions to become a major player in the sustainable energy movement. Now what could be hipper than that?
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It’s very clear that things are on the up and up and the country is trying to beautify itself economically so it can gain the trust of Western companies. It’s easier for foreigners to get a visa in Kazakhstan now than ever before, and there are rumblings of joining the WTO. They get the memo that it’s time to cooperate with international investors other than mother Russia.
Kazakhstan is not without its flaws. The economy wobbles to a great extent with a drop in oil prices, political instability from places like Russia, the Ukraine crisis, and a cooling off of the China growth engine. This is a turning point, though, and although the country may stumble things are moving in the right direction.
In summary, Kazakhstan is an up and coming place in the world that might be more worthy of capital than Europe which is on its way to becoming Japan, Japan who remains in a prolonged recession without any hope of getting out of it, China accruing debt at alarmingly high levels, and the other emerging markets which are on their way up (kind of) but not in a totally linear way. Kazakhstan is the new black.
[i] CIA, The World Factbook, Kazakhstan