INTRODUCING KAZAKHSTANSTOCK EXCHANGE INC. (KASE)

Relevant as of January 1, 2008

COEVAL WITH TENGE …

KASE was established on November 17, 1993 under the name of Kazakh Interbank Currency Exchange – two days after Tenge (the new national currency of Kazakhstan) was introduced on November 15, 1993.

Nowadays, November 15 is celebrated as the official "Day of Tenge".

"New" tenge (since 2006)

"Old" tenge (1993–2006)

YOUNG AND SINGLE …

KASE is a commercial joint-stock company with 69 shareholders (as at January 3, 2008). The National Bank of the Republic of Kazakhstan is the largest shareholder. Other shareholders include: banks, brokerage firms, asset management companies, pension funds and other professional financial institutions.

Voting method: one share – one vote.

YOUNG AND SINGLE … (2)

Today KASE is the single universal financial exchange in Kazakhstan with brief but bright history:

1993 – first trades with foreign currency (US dollars)

1995 – first trades with T-bills

1996 – first trades with derivatives (KZT/USD exchange rate futures)

1997 – first trades with listed equities

1997 – first trades with government stacks of shares

1997 – first trades with non-listed corporate securities

1998 – launching of "nego" deals system on KASE (instead of over-the-counter securities market )

YOUNG AND SINGLE … (3)

1998 – first trades with eurobonds of Kazakhstan

1999 – first trades with listed corporate bonds1999 – first trades with municipal bonds (since 2005 the issuance of these bonds is prohibited)

1999 – launching of the "nego" repo market

2001 – first trades with bonds of international financial organizations (IFO)2001 – launching of "automatic" repo market (the most massive and active sector of the KASE market)

2002 – first trades with the promissory notes2003 – first trades with foreign T-bills (Russia 2028 & Russia 2030 )

YOUNG AND SINGLE … (4)

2006 – first trades with foreign corporate bonds (JP Morgan and Merrill

Lynch)

2006 – IPO of KazMunayGas Exploration and Production shares with the use of KASE settlement system

2006 – secondary distribution of KAZAKHMYS PLC (UK) shares with the use of KASE settlement system

2007 – special trading floor of the Regional Financial Center of Almaty city was founded on the base of KASE (founded to attract foreign issuers and investors)

2007 – launch of the new index on the share market – KASE Index, which continued the number series of KASE_Shares Index

IMPRESSIVE DYNAMICS …

0

50

100

150

200

250

300

350

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Other

Repo

Corporate securities

Public securities

Derivatives

Currencies169.3USD bn

322.5USD bn

0

50

100

150

200

250

300

350

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Other

Repo

Corporate securities

Public securities

Derivatives

Currencies169.3USD bn

322.5USD bn

IMPRESSIVE DYNAMICS … (2)

0

50

100

150

200

250

300

350

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20070

50

100

150

200

250

KASE, USD bn

% to GDP

GDP, USD bn

220.5%

0

50

100

150

200

250

300

350

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20070

50

100

150

200

250

KASE, USD bn

% to GDP

GDP, USD bn

220.5%

UNIVERSAL EXCHANGE …

In total, repo (money) market takes 65.0% of general KASE turnover

8,6%4,5%

2,6%

51,6%

28,4%

3,9%

Direct repo with corporate securities, 14,357.0 USD m

Autorepo with public securities,

166,291.6 USD m

Corporate securities,12,713.7 USD m

Public securities,8,066.1 USD m

Autorepo with corporate securities, 27,852.2 USD mDirect repo with public securities,

1,258.9 USD m (0.4%)

Currencies,91,421.8 USD m

2007 year:

322,474.5USD m

STF RFCA,513.2 USD m (0.2%)

8,6%4,5%

2,6%

51,6%

28,4%

3,9%

Direct repo with corporate securities, 14,357.0 USD m

Autorepo with public securities,

166,291.6 USD m

Corporate securities,12,713.7 USD m

Public securities,8,066.1 USD m

Autorepo with corporate securities, 27,852.2 USD mDirect repo with public securities,

1,258.9 USD m (0.4%)

Currencies,91,421.8 USD m

2007 year:

322,474.5USD m

STF RFCA,513.2 USD m (0.2%)

KASE serves the markets of: "nego" and "automatic" repo with public and corporate

securities foreign currencies (US dollar, euro, russian rouble)public securities of Kazakhstan issued by the National Bank,

municipalities and Ministry of Finance (including international bonds of Kazakhstan)

IFO bonds and foreign T-billspromissory notesequities corporate bonds …

UNIVERSAL EXCHANGE … (2)

"regular" domestic bonds (nominated in Tenge or foreign currencies, with discount or coupon, with fixed or floating coupon)

international bonds of Kazakhstani issuersagency bonds (with the tax regime equal to the tax regime of

T-bills) infrastructural bonds (secured by the government guarantee)bonds of foreign issuers (previously registered outside

Kazakhstan) soon: bonds of foreign issuers (registered in Kazakhstan)

VARIETY OF CORPORATE BONDS

DOMINATION OF REPO AND FOREX MARKETS

KASE repo market is specially designed for domestic purposes – to satisfy the needs of local pension funds and banks in short-term money borrowing and lending.

KASE foreign currencies market – the basic trading site for the National Bank of the Republic of Kazakhstan to regulate the exchange rate of Tenge.

KZT/USD: the KASE exchange rate today = official exchange rate tomorrow.

LISTED COMPANIES (by categories)

9 8 8 1220

27 3038 39

7 9 1313

20

2732

31 31

1999 2000 2001 2002 2003 2004 2005 2006 2007

Category "A"Category "B"

Equities

6 11 6 717

282030

34 3949

61

62

21

10

1

1999 2000 2001 2002 2003 2004 2005 2006 2007

Category "A"Category "B"

Corporate bonds

9 8 8 1220

27 3038 39

7 9 1313

20

2732

31 31

1999 2000 2001 2002 2003 2004 2005 2006 2007

Category "A"Category "B"

Equities

6 11 6 717

282030

34 3949

61

62

21

10

1

1999 2000 2001 2002 2003 2004 2005 2006 2007

Category "A"Category "B"

Corporate bonds

LISTED COMPANIES (in total)

17 23 3249

6879

94114

126

1999 2000 2001 2002 2003 2004 2005 2006 2007

TOTAL

17 1721

54

6269

25

40

68

89

1

78

564545

36

1122

1999 2000 2001 2002 2003 2004 2005 2006 2007

EquitiesCorporate bonds

17 23 3249

6879

94114

126

1999 2000 2001 2002 2003 2004 2005 2006 2007

TOTAL

17 1721

54

6269

25

40

68

89

1

78

564545

36

1122

1999 2000 2001 2002 2003 2004 2005 2006 2007

EquitiesCorporate bonds

MARKET CAPITALIZATION (USD bln)

0

10

20

30

40

50

60

70

2001 2002 2003 2004 2005 2006 2007

Shares

0

2

4

6

8

10

12

14

16

2001 2002 2003 2004 2005 2006 2007

Corporate bonds

0

10

20

30

40

50

60

70

2001 2002 2003 2004 2005 2006 2007

Shares

0

2

4

6

8

10

12

14

16

2001 2002 2003 2004 2005 2006 2007

Corporate bonds

LISTED COMPANIES (by structure)

Global Industry Classification Standard (GICS) of S&P is used

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007

Energy/powerengineeringFinance

TelecommunicationservicesRaw materials sector

Industry

Main consumer sector

Public sector

Information technology

Health protection

Discretionary consumersector

Equities

2000 2001 2002 2003 2004 2005 2006 2007

Corporate bonds

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007

Energy/powerengineeringFinance

TelecommunicationservicesRaw materials sector

Industry

Main consumer sector

Public sector

Information technology

Health protection

Discretionary consumersector

Equities

2000 2001 2002 2003 2004 2005 2006 2007

Corporate bonds

"PURE" CORPORATE SECURITIES MARKET

Total KASE turnover for 11 months of 2007 with the equities – 8,924.4 USD m,with the corporate bonds – 4,302.5 USD m.

0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Equities

Corporate bonds

Turn

over

, USD

bln

"PURE" CORPORATE SECURITIES MARKET (2)

In 2007 average daily KASE turnover with the equities – 27.2 USD m,with the corporate bonds – 16.3 USD m.

0

20

40

60

80

100

120

140

160

2000 2001 2002 2003 2004 2005 2006 2007

EquitiesCorporate bonds

Daily

turn

over

, USD

mil

"PURE" CORPORATE SECURITIES MARKET (3)

The main problems are:• lack of free-float equities (the heritage of case-by-case

privatization)• conservative policy of main domestic investors ("buy bonds

and hold till maturity")

Nevertheless ..

CHAMPION GROWTH (in 2005–2007)

Index KASE_Shares demonstrated the rapid growth: 11.1 times (for the period Jan.05, 2005 – Apr.19, 2006) and 1.2 times (for the period Apr.19, 2006 – Feb.12, 2007), due to the appearance of new investors’ class – mutual funds and individual persons.

2,387(20.08.07)

2,876(17.07.07)

0

500

1000

1500

2000

2500

3000

3500

01.0

1.05

01.0

4.05

01.0

7.05

01.1

0.05

01.0

1.06

01.0

4.06

01.0

7.06

01.1

0.06

01.0

1.07

01.0

4.07

01.0

7.07

01.1

0.07

2,808 (12.02.07)

2,394 (19.04.06)

216(05.01.05)

KASE Index

Institutional investors assets at the end of 2006 reached 78.5 bn USD, 89.0% of them are banks assets,9.1% – pension assets

Principal indicator is growth of unit investment funds assets (at the end of 2006 – 383 m USD)

INVESTOR BASE …

0

20

40

60

80

100

120

140

160

180

1998 1999 2000 2001 2002 2003 2004 2005 2006 9 m2007

0

20

40

60

80

100

120

Unit investment funds assets

Insurance assets

Pension assets

Banks assets

Total assets, % to GDP

GDP

Consequences of excess investor base is the real “zero" yield of debt instruments for investors

INVESTOR BASE (2)

0

2

4

6

8

10

12

2000 2001 2002 2003 2004 2005 2006

Inflation

Yield of "domestic" listing bondsof "А" category

KASE uses it’s own trading platform:on-screen based electronic "Server – Client" system remote accesselectronic signature and electronic documents circulation traffic encryptionon-line data saving

Central Depository is the KASE subsidiary:DVPT+0 settlement basis

ADVANCED TECHNOLOGIES

IN THE FUTURE …

• Waiting for IPO of the largest Kazakhstan banks and producers (according to the Securities Law, at least 20% of the local shares being placed must be suggested at the domestic market for purchase)

• Administrating the Special trading site of the Almaty Regional Financial Center (set-up to attract foreign issuers and investors)

• Welcoming the new listing companies• Waiting for IFOs to place their bonds in Kazakhstan• Ready to introduce T+n settlement basis for the foreign operators (only for

eqities)• Launching currency swap market• Listing unit funds units• Holding active marketing campaigns• Modifying trading system• Launching new version of KASE web-site

CONTACT US …

Internet: www.kase.kz

e-mail: kase@kase.kz

phone: (+7 727) 237 53 00, 272 98 98, 237 53 11, 272 06 00

fax: (+7 727) 296 64 02, 272 09 25

address: 291/3a, Dostyk av., Almaty, Kazakhstan