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AFC Uzbekistan Fund August 2022 Update


Dear Investors and Friends,

August brought about the most positive news for Uzbekistan’s capital markets so far this year with the appointment of Giorgi Paresishvili as CEO of the Tashkent Stock Exchange. Further, the market showed renewed signs of activity in August, after a multi-month period of subdued trading where stock prices drifted lower. The August 2022 fund NAV rose to an estimated USD 1,824 (+1.8%) or +82.4% since inception on 29th March 2019. 


AFC Uzbekistan Fund valuations as of 31st August 2022:

 Estimated weighted harmonic average trailing P/E (only companies with profit):

 Estimated weighted harmonic average P/B: 1.06x
 Estimated weighted portfolio dividend yield: 2.59%


New Tashkent Stock Exchange CEO

One of the biggest challenges in Uzbekistan we have discussed over the years is the lack of capacity in government to successfully deliver on the reforms outlined by President Mirziyoyev. In regards to the Tashkent Stock Exchange (“TSE”), the two CEOs we have seen come and go since entering Uzbekistan in 2018 have arguably been asleep at the wheel, with no international experience and seemingly little enthusiasm or desire to enact much-needed reforms at the exchange. While this issue was blindingly obvious from our first meetings with the exchange in 2018, there was little we could do as investors except wait and be hopeful for an eventual change of management.

That change has finally come as Giorgi Paresishvili has been appointed as the new acting head of the TSE and understands clearly what needs to be done to bring the market in line with international standards. Mr. Paresishvili has 27 years of experience in banking and capital markets and has been the head of the Georgian Stock Exchange since 2014, as well as chairman of the supervisory board of the Georgian Central Securities Depository. He is responsible for connecting the Georgian Stock Exchange to the international settlements’ platform, ClearStream, as well as licensing exchange data to Bloomberg (the latter which we aggressively pushed the two former CEOs to do, but to no avail). Georgia was in fact the second former Soviet country to get financial data hosted on Bloomberg terminals after Russia.

Mr. Paresishvili’s responsibilities in his new role will be based around modernizing the stock exchange. This will include improving market efficiency, establishing new listing and trading rules in line with international best practices, and working to increase the number of listed companies, which we predict will mean increasing free-floats of existing companies as well.

I first had the chance to meet Mr. Paresishvili in 2019 at the Georgian Stock Exchange, and upon hearing of his new appointment in Uzbekistan had a call with him during August to share some of the big picture issues investors face. He is very receptive to understanding the challenges the stock exchange faces in attracting both investors and what is needed in order to make state-owned privatisations on the exchange more successful than they would otherwise be. We have emphasized in the past, that we believe Uzbekistan will in due course emerge as the largest and most influential economy in Central Asia and that if developed correctly, the TSE could become the largest stock exchange in Central Asia as well.

While frontier markets evolve in fits and starts, Mr. Paresishvili’s appointment is an indication to us the government is serious about developing a robust capital markets structure as they are willing to appoint international talent to key positions in order to ensure successful execution.

We look forward to engaging more regularly with Mr. Paresishvili upon his relocation to Tashkent and will aim to add value where and when we can as we want to see the TSE operate at an international standard of quality as it's needed to attract foreign investors and which will, of course, benefit the AFC Uzbekistan Fund. However, more importantly it will benefit the country as a whole.

The TSE should be operating as a functional alternative to prohibitively expensive bank finance for capital raising which is approximately 25% with 125% collateral required. On this note, we will be watching the developments at the exchange closely as the coming months should be very exciting, especially as the government’s plans for privatisation of several state-owned enterprises draws nearer.



AFC Uzbekistan Fund Marketing Information as of the end of July 2022