Equity Investors See Chance in Kazakhstan

ALMATY, Kazakhstan -- The credit crunch that has slowed down Kazakhstan's stellar economic growth and raised concerns about the stability of its financial system has also created good opportunities for equity investors, bankers say.

Most Kazakh companies have traditionally relied on bank borrowing and bonds for their funding needs, unwilling to share control and disclose more information about themselves.

But Magzhan Auyezov, managing director of Kazkommertsbank, said this was changing as loans have become too expensive, and the focus has changed more to equity finance.

The global liquidity squeeze has hit Kazakh banks hard after years of aggressive foreign borrowing and rapid credit expansion. It also crippled the construction sector, which had depended on bank loans.

The chilling effect of the credit crunch is now spreading, as many businesses, especially smaller ones, struggle to secure financing at acceptable rates.

"I think now is the time to look at Kazakh equity," Andre Kuusvek, the European Bank for Reconstruction and Development's Kazakhstan country director, told an investment conference in Almaty on Friday. "The asset prices are being adjusted."

The devaluation of Kazakh assets is creating opportunities for all kinds of institutions from large foreign strategic investors to small domestic private equity houses, he said.