AFC Uzbekistan Fund valuations as of 31st July 2025:
|
Estimated Weighted harmonic average trailing P/E (only companies with profit):
|
3.60x |
| Estimated Weighted harmonic average P/B: |
0.61x |
| Estimated Weighted portfolio dividend yield: |
1.71% |
In July, Uzbekistan experienced its traditional “chilla” (40 days of extreme heat), with Tashkent temperatures regularly exceeding 40 degrees Celsius. With school holidays and the heat driving people to the countryside for a cool and relaxing summer, news flow related to the capital markets was slow, save for one significant development boosting our confidence in the government’s privatisation program.
For those who have visited Uzbekistan with us, you may have met Mr. Karen Srapionov, the former Managing Director of the investment bank and brokerage Avesta, which is one of our brokerage partners in Uzbekistan. Avesta is the most active broker with foreign clients in the country and serves as the local partner of New York’s Auerbach Grayson, a global frontier and emerging markets institutional brokerage firm. Having known Karen since 2018, we can confidently say that his transparency and determination to address issues in Uzbekistan’s capital markets make him the most knowledgeable individual in the country regarding these matters. He has acted as an unofficial advisor to several capital markets government agencies over the years, often working late into the night for free. He also currently holds an independent board member position at the Tashkent Stock Exchange. One issue we have discussed frequently is his limited power to enact change in the ecosystem, although he has influenced significant improvements over the years. However, this situation appears set to change!
On 21st July 2025, Karen was appointed Director of Investments for Franklin Templeton Asset Management Uzbekistan. He is now responsible for leading Franklin Templeton’s management of the National Investment Fund (UzNIF), a USD 1.7 billion state-owned investment vehicle that holds the government’s equity stakes in 18 state-owned enterprises (SOEs), covering the gamut from infrastructure assets to financial services. The UzNIF is expected to pursue a dual listing on the Tashkent Stock Exchange and a major international stock exchange, with the London Stock Exchange (LSE) being the most likely choice, in the first half of 2026, assuming everything progresses on schedule.
Why is this development so significant? There are numerous issues involving local custody by private custodians, share fungibility for dual listings, challenges in opening brokerage accounts for foreign investors, and integration with Clearstream’s platform, among others. Many of these issues have been largely stalled at the Tashkent Stock Exchange and various regulatory bodies, which has prevented increased liquidity from entering the market and hindered the success of the government's privatization program. While Karen’s role is not to resolve these issues outright, working with Franklin Templeton places him in a significantly better position to collaborate with various government bodies to help address these bottlenecks. Of course, the government wants to avoid an embarrassing first IPO failure of a SOE on an international exchange, so they should be motivated to make these changes. Karen is uniquely qualified to identify the necessary steps to enhance the odds of success.
There is much happening behind the scenes in Tashkent regarding the privatization process, and we look forward to sharing more about the UzNIF and other companies on the agenda as they progress. We believe that Karen’s new role strengthens our confidence in the development of Uzbekistan’s capital markets, and we wish him great success.
Regarding Avesta, for those concerned about Karen’s departure, we remain assured as his replacement is Shodlik Nazarov. Shodlik has been a Senior Analyst at Avesta since 2019 and has now assumed a management role. Together with his team and the owner of the company, we are confident that Avesta will continue to operate smoothly.
| 
