Once upon a time in Kazakhstan: how an experiment became an investment strategy

“Wait, you could actually do that?” This is the typical reaction I get when I mention my fairly successful investments in the Kazakh stock market in recent years. That said, I’m not promoting anything. The Kazakh market is not some “undervalued gem” that investors have somehow overlooked. This article is a story about a personal experiment that began spontaneously and, over time, developed into a thoughtful strategy – with its own methodology, challenges, and results .

To truly understand the work of an investment advisor – not in theory, but in real-world conditions – it is important to study not only clean, textbook cases in liquid markets with developed infrastructure, but also less conventional situations: where there are no convenient screeners, no price charts in trading terminals, and the data has to be painstakingly collected piece by piece. The Kazakh market is exactly like that.

Part of this story has already been presented in my column on RBC Pro (in Russian). In this article, I will tell it in full: how I ended up in this market in the first place, what criteria I used to select issuers, and what results I managed to achieve.

Investing wasn’t exactly the plan

In early 2022, Russia’s financial infrastructure changed abruptly: Visa and Mastercard cards stopped working, and direct foreign currency transfers from Russia became impossible. Many people faced an urgent question: how do you now purchase things abroad?

Kazakhstan became the practical solution – a country with a shared border, a Russian-speaking environment, and a banking system that at the time still allowed Russians to make international transfers without significant restrictions.

The account-opening procedure turned out to be simple: a scan of my passport, a local tax number (IIN), a few weeks of waiting – and a courier was already bringing me the coveted cards. For some reason, two instead of one. Each came with:

• four main accounts (in tenge, rubles, dollars, and euros)

• brokerage and savings accounts

• four technical accounts (not displayed online)

I needed two more brokerage accounts later. In total – 16 accounts, and a report had to be filed with the Russian federal tax service for each of them. Not everyone’s idea of fun, but the law is the law. Incidentally, at the time of writing this article (May 2026), the number of accounts had grown to 24 – do not ask why, that’s the bank’s doing.

Initially, the goal was purely utilitarian: to get a card for paying for purchases and transferring money abroad.

However, using an account purely for transit is always a risk.

Due to a lack of consumer and investment activity, the bank may start thinking all sorts of things about you. It was more logical to start using the instruments for their intended purpose.

Of course, shares of US companies were available in the terminal – where would we be without them. But something else surprised me: the list of securities issued by Kazakhstani companies.

The market made a mixed impression.

• On the one hand, real companies with understandable business models.

• On the other – a lack of familiar analytical tools. For example, there were no price charts in the terminals. I managed to find them only in the broker’s mobile app and on the exchange’s website.

But financial statements were there. Which meant work was possible. And so, in June 2023, I bought shares in three Kazakhstani companies.

For example, shares of Rakhat – one of Kazakhstan’s largest confectionery factories, known in Russia for its “chocolate in the blue wrapper.” The intuitive argument was simple: if the product inspires trust in me as a consumer, why not consider it as an investment? In the spirit of Peter Lynch – invest in what you understand and trust.

I was fully aware of the risk: the potential loss of funds is part of the game. But the result exceeded expectations.

Two exchanges, one Kazakhstan

Before moving on to the analysis of specific companies and investment results, it is important to outline the broader picture – without context, the figures in the portfolio lose their meaning.

Kazakhstan’s stock market is built around two fundamentally different exchanges, each occupying its own niche.

KASE – Kazakhstan stock exchange. Founded in 1993. It is the country’s main domestic marketplace . Stocks and bonds, foreign exchange market instruments, derivatives are traded here, and REPO transactions are conducted.

The exchange operates under Kazakhstani law and is supervised by the Agency for regulation and development of the financial market (ARDFM).

Key indicators as of April 2026:

• capitalization – KZT 47.1 trillion (about $102.1 billion at the current exchange rate)

• 76 issuers with 89 share issues listed

• among the top 2 CIS exchanges by securities trading volume

• and among the top 5 within the Federation of Euro-Asian stock exchanges (FEAS)

AIX – Astana international exchange. Launched in 2017 as part of the Astana international financial centre. This venue is fundamentally different from KASE:

• it operates under English law

• it is regulated by a separate body – the Astana financial services authority (AFSA)

• it is focused on attracting international investors

AIX lists 384 financial instruments (stocks, bonds, ETFs, structured notes) from 196 issuers. At the same time, some of the instruments duplicate assets traded on KASE, while others relate to foreign companies. The local Kazakhstani market remains fairly narrow.

The KASE Index has been calculated since July 2000, with an initial value of 100 points. The average growth rate since launch has been about 17.5% per year in tenge.

Within Central Asia, Kazakhstan is the undisputed leader of the stock market, significantly ahead of its neighbors.

Developed exchange infrastructure, transparent issuer reporting, and a functioning index create a solid foundation for investment – something many regional markets lack.

At the same time, in a global context, the picture requires separate analysis.

Interesting and inconvenient

At first glance, the arguments laid out earlier create a favorable impression of the Kazakhstani market. Reality, however, is more complex: its appeal is inseparable from a number of significant features.

Limited liquidity. The average daily trading volume in shares on KASE in April 2026 was KZT 4.3 billion (about $9.3 million at the current exchange rate). For comparison, on the Moscow exchange it was $1.6 billion. Even though the exchange itself is not considered large by global standards. Such volumes are acceptable for small private portfolios, but for large capital they become a significant risk.

A narrow market. The KASE index includes only 10 companies, with the weight of a single stock capped at 15%. In practice, the “liquid” segment of the market comes down to a small circle of issuers. Other assets trade episodically, have low liquidity, or are not actively traded at all.

Shortage of analytical data. Standard tools familiar to investors in developed markets are practically unavailable here:

• aggregated financial indicators are available for only 25 issuers on KASE (there is no such data for AIX at all)

• price charts are available for only six companies – and only for those whose shares also trade on NASDAQ, LSE, or ASX

• information on other issuers is fragmented: it has to be collected manually from the exchange website and the broker’s online account

This significantly increases the amount of work required when making decisions.

Elevated volatility. The market’s low capitalization means that even a small number of participants can move prices significantly. For a long-term investor, this is not critical. However, in situations requiring a quick sale of assets, the risk of a sharp price imbalance becomes an important factor.

Macroeconomic environment. According to Kazakhstan’s bureau of national statistics, in March 2026 inflation reached 11% year-on-year, while the National bank keeps the base rate at 18%. This combination:

• complicates forecasting real returns

• creates a gap between nominal returns in tenge and real returns in hard currency

• requires careful consideration of inflation risks when valuing assets

Duality of legal regimes. The market is divided into two jurisdictions:

• KASE operates under Kazakhstani law and is supervised by the ARDFM

• AIX operates under English law and is regulated by AFSA

This gives rise to differences in compliance requirements, mechanisms for recording rights to securities, and approaches to assessing legal risks.

None of the above is a reason to abandon investing in the Kazakhstani market. But these are the rules of the game. A disciplined approach allows these nuances to be used as part of an investment strategy.

How I select issuers

The question of asset selection principles naturally arises for any investor. My approach to selecting issuers is quantitative in nature: decisions are based on measurable financial data, not intuitive assessments.

The first stage is a rough filter. At the first stage, I analyze the key financial indicators of the most recent reporting year:

• return on equity and return on assets

• operating margin

• debt burden

• quality of cash flow

• a number of other quantitative criteria

The goal is to filter out companies that demonstrate insufficient profitability, have excessive debt burdens, or show signs of structural deterioration in their financial position. This stage is highly automated: most candidates are excluded without a deep dive into the details.

The second stage is analysis over time. Companies that pass the initial filter are studied from a historical perspective – over a period of 5–10 years. The focus is not on the current position, but on the stability of results across different economic conditions, including crisis periods.

In parallel, I conduct comparative analysis:

• compare issuers with one another

• assess their indicators relative to industry indices

The optimal candidate is a company that consistently outperforms competitors on key metrics, rather than simply demonstrating acceptable results at the present moment.

The third stage is assessment of price and investment prospects. Issuers that successfully pass the previous stages enter the watchlist. As a rule, I don’t purchase a stock immediately: even a promising company bought at an inflated price is a risky investment. I only buy when the market price creates a sufficient margin of safety and reduces potential risks to an acceptable level.

Risk management. A position is held as long as the company meets the original selection criteria. The decision does not depend on the news background, analysts’ recommendations, or management’s optimistic forecasts.

The key reference point is objective financial indicators.

For companies with an available price history, fundamental analysis is supplemented by trend-following principles. I track price dynamics and use them as an additional signal for closing a position, which helps lock in profits or limit losses when the trend changes.

Why do I describe this process in detail? Not to demonstrate expertise, but so that you, as my potential or current client, understand the logic behind the recommendations. Behind every transaction there are specific data and clear criteria, which excludes “by feel” decisions and explanations after the fact.

This is a basic framework applicable to any market. For Kazakhstan, it was adapted to local specifics: scarce analytical coverage, lack of consensus forecasts, and a limited news flow. Despite the data shortage, the key principles remain: the process is reproducible, measurable, and transparent. And that is a serious advantage.

I described in more detail how my work with clients is structured here .

Rakhat, Kazatomprom, Kazakhtelecom: why these three

In June 2023, shares of three Kazakhstani issuers entered the portfolio. Here is why I chose these three, and how this relates to the asset selection approach described earlier.

Rakhat (KASE: RAHT). One of the largest producers of confectionery products in Kazakhstan, founded in 1942. The assortment includes more than 400 items: chocolate, caramel, waffles, cookies. In 2013, a controlling stake was acquired by South Korea’s Lotte Confectionery, which made it possible to modernize production and expand the product line.

Why the company entered the portfolio:

• Consumer business with a resilient model. Demand for confectionery products is stable regardless of the phase of the economic cycle.

• Brand recognition. The product is firmly associated with quality among local consumers.

• Stable market position. The company holds a meaningful share in its segment.

Data collection required additional effort: information is fragmented, and some data had to be requested directly. This reflects the specifics of the Kazakhstani market – but it does not negate the investment appeal of the business.

Kazatomprom (KASE: KZAP). Kazakhstan’s national atomic company , the world’s largest producer of natural uranium. By various estimates, in 2023 the company accounted for 37–43% of global supply. It was founded in 1997 and went public on AIX in 2018, opening access to international institutional investors.

Key advantages for the investor:

• Reporting transparency. An IR page in English, regular IFRS reporting, operational updates, and a clear dividend policy – standards familiar to global markets.

• Business scale. Leadership in a strategically important industry.

Main risks:

• cyclicality and volatility of uranium prices

• periodic revision of production forecasts

• state ownership

• geopolitical sensitivity of the uranium sector

The high transparency of reporting made analyzing the company significantly more convenient compared with most other Kazakhstani issuers.

Kazakhtelecom (KASE: KZTK). Kazakhstan’s largest telecom operator , providing fixed-line telephony, broadband internet, mobile communications, television, and IT solutions for business. The company was founded in 1994.

Logic for inclusion in the portfolio:

• Predictable cash flow. The business generates stable income thanks to its monopoly position in a number of segments.

• Critical infrastructure. Communications services are a basic need of the economy, which reduces demand cyclicality.

• History of dividend payments. The company regularly distributes profits to shareholders.

• Reasonable valuation. For a value investor, this is more important than rapid growth: the priority is stability and an adequate entry price.

In 2024, the shares showed strong growth, but in 2025 the dynamics turned negative. The company’s fundamental position in the economy did not change. A useful reminder that the market can temporarily undervalue or overvalue assets without obvious reasons.

The reasoning above reflects the situation at the time the portfolio was formed in June 2023. It is an illustration of the application of the method, not a current analysis of the companies’ present condition and not a recommendation to make transactions.

My portfolio results

Below is the current chart of portfolio performance (calculated in tenge, weekly frequency). Vanguard emerging markets ETF (AMEX: VWO) was used as the benchmark – one of the world’s largest funds investing in emerging market equities. A one-year Kazakhstan government bonds’ yield was used as the “risk-free” rate for calculating the alpha coefficient.

Key indicators as of the end of May 2026:

• Return: 27.2% p.a. in tenge

• Maximum drawdown: −7% for 20 weeks

• Return/risk ratio (RR): 3.87

• Expected alpha: 14.1% p.a.

• Beta: 0.19

The benchmark over the same period showed the following results:

• Return: 19.2% p.a. (also in tenge, of course)

• Drawdown: −14.1% for 33 weeks

At first glance, the results look convincing. However, for an objective assessment, a number of important nuances must be taken into account.

Observation period. At the time of publication, the portfolio had been running for about three years. This is enough for preliminary conclusions about the strategy’s viability, but not enough to confirm its stability over a full market cycle.

Favorable market conditions. During the period under review, the Kazakhstani market showed significant growth. Part of the success is due to fortunate exposure to an upward trend – it is not only a matter of issuer selection quality.

Diversification constraints. Initially, there were three issuers in the portfolio. Over time, it became more diversified, and the risk control mechanism became more sophisticated. Nevertheless, the selection of liquid securities in the Kazakhstani market remains quite limited, which objectively makes diversification more difficult.

Liquidity. The chart is based on data from the broker’s report, but the positions remain open. Closing positions in an illiquid market is not a simple task: the final financial result may differ significantly from the calculated one.

Benchmark relevance. VWO is a broadly diversified emerging markets equity fund, yet it does not include securities of Kazakhstani issuers. Whether it is correct to compare it directly with a local-market portfolio remains an open question.

Taxation. In this case, tax on dividends and coupons is not withheld at source – unlike, for example, investments in European markets or in the United States, where the broker withholds tax automatically, and the investor, depending on the rate and the existence of a double-taxation treaty with the issuer’s country, pays the balance at their place of tax residence.

I pay taxes in Russia. I have many portfolios, and isolating the exact tax burden specifically for Kazakhstani assets is difficult. As a reference point, one can build in a return adjustment of 0.5–1% per year. This factor is not reflected in the chart shown.

Advisor compensation. The investment consulting fee is also not included in the return calculation. As a rough guide, it reduces the result by 1% of the portfolio return, although in practice it often turns out to be lower: the final rate depends on the amount of capital and the duration of cooperation. I described the principles of tariff formation in a separate publication.

This is not investment advice. Investments involve risk. Returns are not guaranteed and may differ from expectations.

Why such case studies matter

The Kazakhstani market is clearly not where an investor should begin building a core portfolio. It is not suitable for allocating large amounts of capital either. It is exotic, with low liquidity, high asset concentration, limited access to analytical data, and a very specific macroeconomic environment.

My personal approach to investing and my acceptable level of risk are my choice. Your goals, investment horizon, capital structure, and risk tolerance may differ significantly.

But it would be unreasonable to entrust capital to a specialist who does not invest his own money.

Personal experience does not guarantee an identical result for the client. However, the absence of such experience, or the inability to confirm it, is a reason to be cautious.

That is why I intend to continue sharing such case studies.

They allow you to see the real decision-making process and form an idea of how a strategy works in practice – with all its strengths and weaknesses. So that you not only receive recommendations, but also understand the logic behind them.