Main reasons of reducing assets of Kazakhstan's National Fund disclosed

BAKU, Azerbaijan, Jan.14

Trend:

The assets of Kazakhstan’s National Fund (KNF) as of late 2020 made up $58.7 billion, having decreased by $3.1 billion since the beginning of the year according to preliminary data, Trend reports citing the country’s National Bank.

The main reason for the decline in assets was the excess of withdrawals of funds for the allocation of transfers to the budget over revenues.

In 2020, KNF once again played its role as a ‘safety cushion’. To fight the COVID-19 pandemic’s consequences, the amount of the guaranteed transfer from the fund was increased by 2.07 trillion tenge ($4.9 billion) to 4.77 trillion tenge ($1.1 billion), while its revenues over the year amid the low oil prices equaled only 1.4 trillion tenge ($3.3 billion).

In the meantime, the positive profitability based on the results of the management of KNF compensated most of the net withdrawals. Despite a significant drop in financial markets due to the pandemic in early 2020, the National Bank continued the transition from a conservative to a balanced allocation of the fund’s assets and raised the shares of more risky, but simultaneously more profitable assets, such as stocks, corporate bonds and bonds of developing countries.

The work on the gold portfolio’s formation was continued. Over the past year, KNF purchased gold for $1 billion.

As a result, the share of the portfolio in the fund's savings portfolio reached 4.4 percent, or $2.4 billion and thus, it was possible to achieve a positive yield of the fund. According to preliminary data, in 2020 the investment income on the assets of KNF amounted to $4.1 billion, or 7.5 percent.

Following positive news about vaccines in November 2020, positive trends in global financial markets consolidated in December. One of the positive boosts to growth in the month was a $900 billion stimuli package in the US. Meanwhile in Europe, the Stoxx Europe 600 grew by 2.6 percent after final approval of the UK’s trade deal with the EU.

Despite tough COVID-19 restrictions in the UK, the country's leading FTSE 100 index rose by 3.3 percent in December, and the MCSI World global developed stocks by 4.3 percent.

Overall, global stocks ended the year at record highs, despite the pessimism over COVID-19 and political uncertainty that has affected markets this year. The profit rate on the MCSI World Index for 2020 made up 16.5 percent.

(1 USD = 418.96 KZT on Jan.14)