Kazakhstan Stock Exchange Posted
FEAS holds an interview with the Chairman of the Management Board of Kazakhstan Stock Exchange Ms Alina Aldambergen. Ms Armenuhi Hovakimyan, FEAS Deputy Secretary General spoke with Ms Aldambergen about KASE’s current operations, “work from home” routine, how COVID-19 affects the market and more.
Armenuhy: Hello, this is FEAS Talks and I am Armenuhy Hovakimyan. My guest today is Alina Aldambergen, the Chairman of the Management Board of the Kazakhstan Stock Exchange. Ms Aldambergen, thanks for joining me.
Alina: Hello Armenuhy, thank you for inviting to FEAS interview.
Armenuhy: Thanks. Ms Aldambergen, I would like to start with the topic which is inevitable in this time: coronavirus, pandemic and how we are dealing with this. How KASE is dealing, how the activities have changed? In general, how the market in Kazakhstan was affected with the pandemic?
Alina: Thank you for your question. At this moment of time, we have about 80% of staff working from distance. Unfortunately, since March we had to switch to this type of work. Even though in May and June we worked full time, but right now we are having the virus spreading situation in Kazakhstan and the Government is speaking about the additional measures and just now was announced that there will be another quarantine period for 14 days beginning from July 5th.
As a stock exchange, like in other countries, we continue our work. Even though we had a lockdown period from March 19 until May 11 and for the another lockdown period we will reduce activities from July 5th to July 19th.
Armenuhy: So you are having, the whole World is having the second wave of pandemic and Kazakhstan also. You will go for the second lockdown. In the beginning of the past lockdown the market was fluctuating and volatility was very high. How do you predict this time, during the same wave of lockdown? Do you predict the same market activities, the same behaviour of the market or it will be changed?
Alina: I think that right now the situation is different. We all are in a more save environment, we understand what is happening, how to fix business. Of course, it negatively reflects on the economic situation but at least we are more familiar with the situation. Because, again, we can have enough information about the disease and extra measures had been taken, a lot of businesses were closed down. Right now we are going to have a quarantine, but it is not going to be as strict as it was in March and April. But talking about the exchange business, in Kazakhstan, we have a different model, we don’t have only stock market, we have quite a number of markets, and these markets are different in situations like this. We have state securities market, we have corporate bonds and shares, we also have a fixed income market, repo market. Taking into account that all kind of trading is done through Kazakhstan Stock Exchange, even if some markets have less activities and issues, it is compensating by having more activities and issues on the others (example bonds, that are coming from Ministry of Finance or corporate sector). This is what we observed this year. If you look at our figures for the first half of 2020 we have a slight increase in total trading volume. We had around 60 trillion tenge or around 149 billion dollars and in comparison to the first half of 2019, it is more than 5%.
In March we had quite a drastic situation because the whole World was falling in the parts, there was significant volatility in the stock markets. The same happened in Kazakhstan shares market. But some of our index shares are only locally traded and they were less volatile, but those that are being traded on other stock exchanges, like London Stock Exchange, they had a quite significant falling. We notice the S&P index reduce by 11% during one day, in Kazakhstan we had 3.8%. Actually the index during the first half of this year was fallen only by 0.9%. So, it was not that significant.
I think it depends on the local situation. For example, in Kazakhstan, we have a lot of national companies’ shares and bonds traded and the Government announced that the companies will pay more dividends and it helped companies. But the similar trend we saw in the other markets. We had significant retail activity, an increase in retail accounts: in one month more than by 3300 accounts, also a lot of retail trading taking place. At the same time, this helped shares market total volume to increase.
Armenuhy: So, as a business, stock exchange is doing well during these times, but from the operational part, how do you like work from home thing as a leader?
Alina: (smiling) Personally I don’t like and a lot of discussions are taking place, whether it is good or not to work from distance. Even though, for stock exchanges it is possible. Also talking about Kazakhstan Stock Exchange we had contingency plans in place, we are familiar with this kind of working from distance, we have different plans of how to organize this business. For us, the only unusual part was the fact that we had to extend it for a longer period, like two months. The other thing was, that we had to cover all employees. For contingency plans we have some extra groups who work for that period of time, so the less people involved. While during pandemic we had to expand it for all employees, that required additional investments in equipment, telecom, internet, and so on. All these were done very quickly. The whole country switched to distance working and that affected also the support of these operations. All students and school children also switched to the distance learning that brought additional pressure on the systems.
Thus, we actually have staff operating from home even, though, for each certain period of time we had no more than 10% of staff working from home, but in general we have the model that 20% can work from home.
Armenuhy: You had a contingency plan, crisis management plan before the pandemic and you could manage it easily. This is great!
What about the projects? Working from home, being on distance, how these affected the projects? What projects do you have, what part of it had been postponed, started from events? In general, how these all affected the projects. As I know KASE is a very active stock exchange, doing many projects simultaneously, that’s why this question is important.
Alina: Unfortunately we have delays in the projects’ implementation. The major project was switching to the new trading system. We have already postponed it two times. First time, we had a launch day at the end of March and it was impossible to do, as we had quite strict quarantine in March. But it’s not only about the stock exchange, but also our clients: banks and brokers, all of them are working on distance and setting up the system, preparing staff, which is quite difficult. Postponed launch we had in June, but because it’s quite a big market, we had to switch the repo market to a new trading system. We also launched new processes like CCP for the repo market. In Repo market we have around half to one billion trading volume during the day, more than 400 transactions. So it is quite significant. We were prepared for that but we saw that additional preparations were needed. So we delayed it and we were planning to launch it at the end of July. Now we’ll see how this new lockdown will affect the process. Because we are completely prepared, the businesses are prepared, but if we operate not from the office there are some extra risks that can appear, like connection and internet. So, we will see how all will be prepared for the launch on distance.
Armenuhy: Clear! During the hard times, communication is important, critically important and KASE is managing this quite well through social media, through interviews. We are following you and the communication is at a good level. So, you also launched a new series ‘KASE Talks’, will you please tell us what are the main outcomes of this project? You launched it during the pandemic, right? How do you evaluate this project?
Alina: Actually, we launched KASE Talks long time before. They were not by video but in person at our room facilities. People always come to KASE, where we were having speakers’ talks. We launch this in 2018 when we had the 25th anniversary of KASE. The idea was to have different financial professionals and economists talking about the development of the market, how the stock market, the financial market is developed. Because the 25th anniversary of the stock exchange was together with the anniversary of the tenge, also the financial sector. It was an interesting discussion. Then we understood that it was becoming popular among students, among professionals and getting publicity. So, we continued to operate it. But what we have done this time, in the second forum, we had to switch it into a new format. Actually, you are quite right that we are doing a lot of activities. In Kazakhstan, it is popular to meet and socialize in person, while now we have to think about new ways of communication and that’s why we increased our activities in social networks, via Facebook, LinkedIn, Instagram, because right now we are not prepared, and this is not only us, but also our clients. It is difficult for universities students who are studying on distance or other businesses. So, we will see how to switch our educational events, our business events to online events. We have already switched our press conferences online. We have done a number of them. KASE Talks we have done via Instagram. Now we are studying how we can put all our activities on video format, streaming on social networks, via Zoom or other. All meetings of KASE are being done via video conferencing tools.
Armenuhy: Coming to the communication, you mentioned about the universities and public, KASE, in general, is doing many activities in boosting financial literacy in your country. Connected with this Covid crisis and pandemic, how do you see the continuation of these activities? You switched everything to online. What are the new tools you are going to use in financial literacy part?
Alina: As I mentioned, during this pandemic situation starting from March, we had to switch, operate and streamline our business activities. We were busy with that, but right now we are thinking about how to switch the communication activities, our meetings with clients. Taking into account that now is a Summer period with a new wave of Covid-19 in Kazakhstan. This brings down available staff, some of our people got ill, so again, we have to operate with small teams. We are going to be prepared to restart these activities in September when the business activities will be back. I hope by that time the second wave will be slowed down with more businesses back to work. Still, for safety reasons, we have to be prepared to conduct everything online at least for the next half of the year. We will need to think about how to organize these events, what kind of presentations to make, as it is a different discussion when speaking in person. So, we will need to reorganize and some of video-conferencing facilities allow us to do that. We already have an experience of working in groups by video. So, we have to be prepared for this and right now we are starting this preparation.
Armenuhy: Coming to the country, in general. What kind of stimulus things the Government is doing now? For the first wave and the second wave. Can you mention several of them to understand how the Government is dealing and what part the capital market has in this?
Alina: The measures that are taken by our Government are similar that other countries are doing. The same for Central Bank. Except one, that in our country we had a lot of liquidity in banks and we don’t need to take some measures in the market, to repurchase some of the financial instruments in order to provide more liquidity. What is more important, to provide cheap loans to our business, to postpone the payments of loans to the businesses, especially SME. Because SMEs were quite affected by the previous lockdown and now we are having again reduced activities. Some businesses are really suffering like cinemas which are not sure when will be opened, like shopping malls and different entertainment places, food courts, fitness centres will be again closed down. For all these SME businesses, Government took measures to postpone loans payments, second: to provide cheaper loans, and still stimulate investment activity in different sectors. Especially, as we also affected by oil prices’ fluctuation, and prices that have fallen significantly still stay low due to negotiations, due to the economic situation. We also have some complications with oil export. We have to think about new ways of generating income for the country.
Armenuhy: In general, the situation is negative, but there are some thoughts that there can be also a positive outcome. How do you think, is there any positive change that can happen after this?
Alina: All of us like to live in boom times, not in bad times. (Smiling). At bad times it is a good opportunity to appreciate what we have, to reduce extra expenses, increase efficiency. We internally in the company and country wise intend to increase the efficiency of our operations, to reduce unnecessary investments. It is also important that we are all thinking of switching to distance working which in the future will reduce office space. Right now it is becoming very important to have strong telecommunication lines, internet lines and additional investments could be necessary in the country to enhance this. Expenses like commuting and so can be reduced and all can be done online.
On the other side, I am a strong believer and I think it was obvious during the previous pandemics that people are very social creatures. As long as we have the opportunity to communicate, we will always communicate, meet in person, attending the conferences. We are actually looking forward to FEAS meetings in person, Board meetings, General Assemblies, ConFEAS which will probably be done again online. Online communication is also very important nowadays. We are all busy right now to streamline our operations, to adjust to the new operating environment. Conference calls and video communication take a lot of time and it is difficult to be seated all the time, listening, quite a lot of pressure, but as long as being used to it, it will be our communication way in the coming future. As soon as it finishes, we will have an opportunity to travel and see each other as that is quite important. Coming back to your question: we have to improve our efficiency, to automate our operations, digitalise all activities. Right now we are working on reducing paperwork, improving business processes, improving efficiency.
Armenuhy: Efficiency is very important here. And the last question: as a woman leader how you are motivating your staff to manage this crisis and hard times?
Alina: We are trying to communicate with everyone. We are having our weekly meetings with directors by videos, discussing the current plans. Everyone is in touch. I think we will have more if the situation stays the same. We are also having meetings with all the staff. Instead of previous town hall meetings, we are contacting by video, which is also good. Just to keep the communication going. We are actively using also email communication. Our HR and directors are doing a good job by keeping the communication with the staff. It is quite a difficult situation in my view. As a woman leader, I think it is very important to support everyone, talk to people, especially when they are ill or feeling bad, knowing their needs and help if we can. Keeping communication means our people are not alone, the team is supporting you and we are in touch.
Armenuhy: Thank you, Ms Aldambergen for this interview, for your thoughts! Good luck in this difficult situation with all your projects, technology projects. We at FEAS hope you will launch it successfully. We are sure in this. See you soon, hopefully not only online but also onsite.
Alina: Thank you Armenuhy! I would also like to thank you, Konstantin and your team! You are also keeping close contact with us. You are one of the firsts who organized these online meetings and discussions. This is good! For us it is also a way to learn from other exchanges, what they are doing, to share our experiences. Finally, hope to see you and again to be in touch, as everyone is feeling much on their own, you cannot be contacted much, talk to your friends, because we all are trying to keep save and keep distance, missing communication. Hope to see each other in person in the future, organize small events, maybe mini-conferences where we can talk about what is happening in different markets. Let’s stay in touch and thank you very much.