Goldman Sachs: Azerbaijan can claim position of regional capital market
By Aynur Jafarova
Azerbaijan can claim the position of a regional capital market, considering the size of its economy and foreign exchange reserves, according to Halil Emecen, a top executive at Goldman Sachs, one of the world's largest commercial banks.
"Given Azerbaijan's position, the size of its economy and resources, the country has the right to claim the position of a regional capital market. All resources and conditions for that are available," Emecen told journalists in Baku last week.
According to Emecen, development of the domestic capital market always takes time. The process is based on the desire and support of the government as well as on the presence of its members and their business interests.
In any case, Emecen said, development of the domestic capital market is an essential factor in the formation of internal sources of funding for local companies and for those who are in need of financial resources. This process cannot be viewed as a project with potential for quick implementation, the Goldman Sachs official said.
"This is an inevitable process for Azerbaijan. Capital market development is inevitable and fueled by economic growth of the country and the availability of foreign exchange reserves," he added.
According to Emecen, present capital markets have great possibilities and this is due to the fact that at present, most banks in the world implement the policy of applying no interest rates, therefore, investors are in search of opportunities. Also, given the strong macroeconomic position, the ranking of Azerbaijan and its position in the world, the country has a good chance to borrow loans at very low interest rates.
Speaking of the establishment of local investment companies in Azerbaijan, Emecen believes the availability of infrastructure of the domestic stock market and professional participants is an indisputable factor in successful development of the market.
"Our experience shows that in all countries we work in, availability of strong professional participants, including investment companies, is a necessity, as local partners may help, develop these or other options, based on knowledge of the local market and other factors. Therefore, successful work will be based on interaction of local and global partners," Emecen said.
Power producer's success
Emecen said that the path of qualitative development passed by the Azerbaijani state-owned electrical power producer Azerenergy allows it to enter the global capital market.
Azerenergy deals with the production and distribution of electricity in Azerbaijan. In particular, the company sells electricity to Bakielektrikshebeke, which then distributes and sells it in the capital Baku.
According to Emecen, Azerenergy has covered a long road in using international financial reporting standards and good corporate governance practices in the implementation of internal procedures, in compliance with all international standards.
This is reflected in the international credit rating assigned to it by Standard & Poor's. Last Thursday, Standard & Poor's Ratings Services said that Azerenergy was assigned "BBB-" long-term and "A-3" short-term credit ratings and the forecast is stable. According to the ratings agency, the ranking of Azerenergy, a vertically integrated electric utility, was equalized with the rating of its 100% owner, the Republic of Azerbaijan (BBB-/Stable/A-3).
"Such an assessment of the company allows it to enter capital markets, expands access to all other transactions with any other member of the global financial system," he said.
The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals.
Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world.