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AFC Uzbekistan Fund valuations as of 30th September 2025:
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Estimated weighted harmonic average trailing P/E (only companies with profit):
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3.56x |
| Estimated weighted harmonic average P/B: |
0.61x |
| Estimated weighted portfolio dividend yield: |
3.16% |
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Capital Markets: The bankers are circling the fee trough
With the news of President Mirziyoyev’s working trip to the United States on 22nd September 2025, the investment banking world is now circling Uzbekistan for they see potential fees galore. In meetings with BNY Melon, Citigroup, Jefferies, Blackrock, Oppenheimer, Franklin Templeton, and Nasdaq, the discussion centered around these institutions being involved in Eurobond offerings, the privatisation process, and supporting the IPO process likely via joint bookrunning.
There was also discussion around capital markets infrastructure development through assisting with modernizing the Tashkent Stock Exchange through the creation of mechanisms for further protecting the rights of investors, increasing the transparency of the regulator, attracting international custodians, and introducing digital platforms. On the custodian front, with the current sandbox legislation, Bank of Georgia is already active and it increasingly looks like BNY Melon and an international brokerage house could be offering custody in the near future as well. Such news is pivotal in developing the local capital markets, giving foreigners who want their securities held by a foreign custodian more comfort when investing. This naturally should also increase the flow of capital into the market, translating into a further re-rating.
For AFC, what was perhaps most interesting from President Mirziyoyev’s trip was his discussion with Nasdaq’s President and CEO, Adena Friedman, about their interest in modernizing the Tashkent Stock Exchange and creating an integrated infrastructure for trading government bonds. While the Korean Stock Exchange is a minority owner of the Tashkent Stock Exchange (TSE), they have done little to push for its development and appear to be rent-seeking, charging fees for their software rather than developing the exchange, a similar strategy to what they have unfortunately done in other frontier markets. If Nasdaq gets involved, it would be very exciting, just as we saw top financial institutions involved in the development of the Astana International Stock Exchange last decade, but we will temper our expectations until we see some tangible announcements.
Tashkent Stock Exchange management change
Interesting timing with the Nasdaq’s expression of interest to develop the TSE in late September, on 8th September 2025, the Tashkent Stock Exchange announced a change in management. Mr. Giorgi (George) Paresishvili didn’t have his contract renewed and stepped down as Chairman of the Board of the exchange following the completion of his three-year term. He was superseded by Mr. Fayzulla Tashov, who has been appointed Acting Chairman of the Board. Mr. Tashov began his career in 2001 at the Commercial Bank “Uzpromstroybank.” From 2005 until present, he has held leadership positions at the Central Securities Depository of Uzbekistan, and since 2024 he has served as Head of the Depository Services & Settlement Operations Department at the Central Securities Depository.”
Regular readers may be wondering if this is good or bad news, for in his early days at the exchange, we sang George’s praises as a potential catalyst to transform the capital markets. The unfortunate reality is that he did not deliver any significant changes during his tenure, including getting equity quotations seamlessly hosted on Bloomberg (whose datasets were exceptionally flawed at the onset, and which we had to get involved via direct interaction with Bloomberg to ensure accuracy). Nor did he execute on a connection with Euroclear.
While surely his hands were partially tied by not being able to amend legislation himself, we look forward to new management in time who can hopefully better execute. However, over time it has become increasingly clear that the driver behind a successful capital development strategy will ultimately be President Mirziyoyev’s privatisation drive. For without a successful sandbox comprised of international brokerages, custodians, and broader infrastructure to drive liquidity, the road ahead would be bumpy. Luckily, it has been clear from the beginning through multiple presidential decrees over the years that the President is indeed focused on Uzbekistan having a functional capital market. This is merely the growing pains of a frontier market.
On the current privatisation program, as we have said over the past several months, the Uzbekistan National Investment Fund, being managed by Franklin Templeton, will be the next catalyst to push the development on the capital markets, namely in custody, liquidity, and transparency. We are looking forward to attending their investor tour from 21st to 24th October 2025, seeing which investors stop by, and more importantly, the government’s strategy to make this listing a success, paving the path for future successful listings.
