Azerbaijan’s Stock Market to Liven up in 2009

Azerbaijan, Baku, December 2/ Trend corr I. Khalilova/ "Thanks to the activity in the market of state securities, the turnover of stock deals in the Baku Stock Exchange (BSE) can total to $9mln in 2008," Khayal Abdinov, chairman of the Board of Directors of BSC, said.

He said drop in growth rates in Azerbaijan's growth rates affects activities of the stock market of the country which has reduced chances of totaling turnout of stock deals to forecast indicator. Forecast for this year has been placed at AZN 8bln-AZN 10bln.

The reduction in operation accounts mainly for the market of shares and cooperate bonds due to the worldwide processes. However, reduction in turnover of securities is compensated through state sector.

"Reduction in the volume of deals on corporate bonds is attributable to impartial reasons. Major buyers of these securities are foreigners. In 2008, they faced problem of liquidity which led to withdrawal of speculative money from the market of bonds," he said.

In early 2008, National Bank of Azerbaijan called on banks to pursue a careful policy given the assessment of all elements of situation in the market. It recommended banks to establish an institutional platform until the rise in assets and operations. At present, Azerbaijani banks manage assets worth AZN 150-AZN 200mln on average. Therefore their risk management, adequacy of the capital and system of corporate governance must meet the best standards, NBA says.

"In this situation it is difficult to forecast volume of stock deals for next year and introduction of new instruments," Abdinov said.

Much is expected from securities market next year due to the last statements of a new chief of the State Securities Committee Rufat Aslanli on preparations to the actions of the government on development of stock market. State Securities Committee plans to elaborate program of reforms and action plan aimed at development of market of securities.

"We have certain tasks. On one hand, it may seem that global financial crisis restricts development of securities market, but on another hand, it enables to carry our reforms in this sphere. We plan to implement a large program of reforms," Aslanli said.

The State Committee plans to assess not only the securities market in whole but also its different aspects to develop reform program. It concerns legislation, infrastructure, readiness of participants of markets and roles of enterprises in functioning of market.

"We will specify problems of the market and directions of our activities on the base of this assessment," the head of the State Securities Committee said.

The State Securities Committee plans to realize large enlightenment work both amongst participants of the securities market and potential investors, as well as to increase number of tools at the securities market.

In 2007, total turnover of stock deals on all tools at the BSE made up AZN 5,483,760, which is by 394.94% more than amount of operations in 2006. On 1 November in 2008, turnover of exchange amounted to AZN 7,356,700, which is by 192.77% more than the figure in the same period of 2007.

Khayal Abdinov, the head of BSE, does not regard necessary to correct forecasts, which stated that income of exchange would exceed AZN 1mln in 2008. Despite rise of exchange operations as compared to 2007, index of income has been forecast practically at the same level, which is connected to expansion of expenditure points.

Shareholders of exchange have decided to increase expenses to develop the stock market.

Meanwhile, there are not any plans on increase of capital of exchange (the authorized capital of the BSE makes up AZN 1.14mln).

In 2008 major aspects of activity of exchange include creation of stock indexes, update of auction system, involvement of banks and foreign investors in the Azerbaijani securities market. At present the American, English and Russian investors are participating in the stock market of the country and they invest not only in corporate bonds and stakes, but also in the state securities.

These priorities have been maintained in 2009, because activity of foreign investors in the stock market of the country reduced on the background of the world crisis. It is planned to review tariffs to stimulate growth of operation at the securities market.

The exchange rate for US dollar is AZN 0.8094 on 2 December.

The correspondent can be contacted at

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