Supply on Azerbaijan’s stock market below global demand
By Gulgiz Dadashova
World investors are taking great interest in Azerbaijan, particularly the local stock market.
State Securities Committee chairman Rufat Aslanli said the Caucasus region is always in the center of attention of global investors and Azerbaijan is the region's leader in terms of economic status and investment attractiveness.
Therefore, Aslanli believes, Azerbaijan is always in the focus of global investors' interest. He said the investors are interested not only in bonds, but mostly in the stock market.
"When purchasing bonds, investors prefer state securities to reduce their risks. However, given the stable condition of the state budget, Azerbaijan's Finance Ministry does not aspire to active issuance of the state bonds.
"Traditionally, in recent years, the Finance Ministry issues bonds in the second half of the year and in small amounts with a view to maintain activity in the country's financial market," Aslanli said, adding that yields of the notes of the Central Bank of Azerbaijan (CBA) are at a low level, which is an indicator of macroeconomic stability and investors cannot meet their interests.
Meanwhile, the State Securities Committee reported about a change in the structure of the stock market of Azerbaijan.
According to the data, the changes in the structure of the market in favor of corporate securities have led to an increase in the corporate segment by 65 percent, including the stock market by 2.2 times, with initial public offering of shares increasing 2.7 times and their secondary market 1.9 times. The volume of securities was 146.3 million manats on the market of shares and debt securities, with 92 million manats in the stock market.
In the local stock market, Aslanli said the supply is much lower than the demand on the global market.
"Interest is being observed, but it is necessary to ensure adequate supply to meet that interest. This is one of the directions of the state program on the development of the securities market in Azerbaijan until 2020," Aslanli said.
In the first quarter of 2013, the volume of the securities market in Azerbaijan reached 1.7 billion manats, which is 12.9 percent of GDP and 25.2 percent of non-oil GDP.
In 2013, the Azerbaijani corporate securities market is likely to continue to win back the position from the state securities market due to the inevitability of a massive issue of shares by banks, the capital requirements for which will grow five-fold from January 1, 2014. Also, one or more IPO is expected at the Baku Stock Exchange.
In connection with the return of the Finance Ministry with its bonds to the stock market, one can also expect the state securities market's recovery. It is grounds to presume that by late 2013 overall growth of the stock market will be restored, and its depth will be about 18-19 percent of GDP against the background of a repeated increase in the economic growth rate this year.