INTRODUCING KAZAKHSTANSTOCK EXCHANGE INC. (KASE)

Relevant as of August 1, 2007

COEVAL OF TENGE …

KASE was established at November 17, 1993 under the name of Kazakh Interbank Currency Exchange, two days after the launching of tenge – new legal tender of Kazakhstan.

Now, that day (November 15) is celebrated as the official annual holiday "The Day of Financiers".

"New" tenge (since 2006)

"Old" tenge (1993–2006)

YOUNG AND SINGLE …

KASE – non-commercial joint-stock company with the 59 shareholders – National Bank of Kazakhstan (the largest shareholder), banks, brokerage firms, asset management companies, pension funds and other professional financial institutions.

All of them have only one vote each*.

* Item to discuss.

YOUNG AND SINGLE … (2)

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

1993 – first trades with the foreign currency (US dollars)

1995 – first trades with the T-bills

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

1997 – first trades with the listed equities

1997 – first trades with the government stacks of shares

1997 – first trades with the non-listed corporate securities

1998 – launching of the OTC securities market within KASE

YOUNG AND SINGLE … (3)

1998 – first trades with the eurobonds of Kazakhstan

1999 – first trades with the listed corporate bonds

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

1999 – launching of the direct repo market

2001 – first trades with the supranational (IFO) bonds

2001 – launching of the automatic repo market (the most massive and active sector of the KASE market)

2002 – first trades with the promissory notes

YOUNG AND SINGLE … (4)

2003 – first trades with foreign T-bills (Russia 2028 & Russia 2030 )

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

Lynch)

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

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

IMPRESSIVE DYNAMICS …

0

20

40

60

80

100

120

140

160

180

200

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

Other

Repo

Corporate securities

Public securities

Derivatives

Currencies

169.3USD bln

IMPRESSIVE DYNAMICS … (2)

0

20

40

60

80

100

120

140

160

180

200

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

0

50

100

150

200

250

KASE, USD bln

% to GDP

GDP, USD bln

220.5%

UNIVERSAL EXCHANGE …

In total, repo (money) market takes 66.2% of general KASE turnover

8,7%

5,0%

2,7%51,9%

26,9%

4,0%

Direct repo with corporate securities, 9,019.9 USD mil

Autorepo with public securities,

92,822.5 USD mil

Corporate securities,7,195.8 USD mil

Public securities,4,894.1 USD mil

Autorepo with corporate securities, 15,507.2 USD milDirect repo with public securities,

1,005.9 USD mil (0.6%)

Currencies,48,057.3 USD mil

178,887.3USD mil

STF RFCA,384.6 USD mil (0.2%)

KASE serves the markets of:direct 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)

supranational 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 Kazakhstan 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 borrowings and lendings.

KASE foreign currencies market – the basic trading site for the National Bank 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 32

1999 2000 2001 2002 2003 2004 2005 2006 2007

Category "A"Category "B"

Equities

6 11 6 717

2320

30

34 3949

6161

21

10

1

1999 2000 2001 2002 2003 2004 2005 2006 2007

Category "A"Category "B"

Corporate bonds

LISTED COMPANIES (in total)

17 2332

4968

7994

114 120

1999 2000 2001 2002 2003 2004 2005 2006 2007

TOTAL

17 1721

54

62

70

25

40

68

84

1

78

564545

36

1122

1999 2000 2001 2002 2003 2004 2005 2006 2007

Equities

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

MARKET CAPITALIZATION (USD bln)

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

LISTED COMPANIES (by structure)

2000 2001 2002 2003 2004 2005 2006 2007

Corporate bonds

"PURE" CORPORATE SECURITIES MARKET

Total KASE turnover for 7 months of 2007 with the equities – 5,081.3 USD mil,with the corporate bonds – 2,499.7 USD mil.

0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

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 – 34.8 USD mil,with the corporate bonds – 16.4 USD mil.

0

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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.

2,708(31.07.07)

0

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2500

3000

3500

01

.01

.05

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.07

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.01

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.07

.07

KASE_Shares2,808

(12.02.07)

2,394

(19.04.06)

216

(05.01.05)

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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

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120

Unit investment funds assets

Insurance assets

Pension assets

Banks assets

Total assets, % to GDP

GDP

Institutional investors assets at the end of 2006 reached 78.5 bln 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 mln USD)

INVESTOR BASE …

0

2

4

6

8

10

12

2000 2001 2002 2003 2004 2005 2006

Inflation

Yield of "domestic" listing bondsof "А" category

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

INVESTOR BASE (2)

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 the 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 the IFOs to place their bonds in Kazakhstan• Ready to introduce T+n settlement basis for the foreign

operators (only for eqities)

CONTACT US …

Internet: www.kase.kz

e-mail: kase@kase.kz

phone: (+7 327) 237 53 00, 272 98 98, 237 53 11, 272 06 00

fax: (+7 327) 296 64 02, 272 09 25

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