In line with our process of being on the ground in the countries we invest in, Scott Osheroff (Regional Analyst) travelled to Kyrgyzstan in order to meet with companies and an official of the local stock market. All photos are by Asia Frontier Capital.
Touching down at Manas International Airport in Bishkek, Kyrgyzstan’s capital, after having made the 45-minute flight from Almaty, Kazakhstan, I was keen to learn about the country and its economic prospects.
Disembarking the plane and standing in line for immigration it became immediately apparent that Kyrgyzstan is much more open to outsiders than its northern neighbour, Kazakhstan. The immigration queue was busy but moved very fast as there were two lines—one for parents with children and the other for everyone else. With no immigration or arrival card, as is needed in Kazakhstan, the line of at least 100 moved quickly and after being greeted by the immigration with a “Welcome to Kyrgyzstan” I was off to wait for my bag.
Upon passing through customs I was bombarded by unofficial taxi drivers all vying for my business. Having played this game many times before in other countries, I first made a beeline to the most competitive money changer as I had no local currency, Kyrgyz Som. Upon converting some money, a taxi driver who had been eyeing me asked if I needed a ride to Bishkek. Testing the market, I said “sure” and he asked 800 Som for the ride. As the first price asked is usually far too high I politely said “nyet” in my limited Russian and put up five fingers seeing if he’d accept my bid. More curious than anything to see how low he would go, after not budging from my price the taxi driver eventually buckled and agreed to 500 Som’s (USD 7.32) for what would turn out to be a 45-minute ride. In his broken English and a friendly smile, the driver said, “You must come to Bishkek a lot. You know the local price.”
Getting into the taxi and making our way towards Bishkek the driver was keen to start a conversation, though he didn’t speak English. I spoke neither Kyrgyz nor Russian. So after running through the languages we didn’t speak we eventually settled on Spanish!
The road from Manas Airport to Bishkek may be the nicest in the country, with two lanes each way and newly paved with minimal traffic. As we made the drive towards my hotel in the downtown of Bishkek the snow-capped mountains which buffer the city became increasingly visible on the horizon amid the early evening sun.
The next morning, I was met by my contact and new friend who was one of the founders of the Kyrgyz Stock Exchange, Central Depository, and a previous head of the State Service for Financial Market Regulation and Supervision (the Kyrgyz equivalent of the SEC). Over a breakfast of monty (teardrop-shaped meat dumplings) and black tea we discussed the business environment in Kyrgyzstan, as well as the current state of affairs at the stock exchange.
The Kyrgyz Stock Exchange lists 21 companies, all of which have varying degrees of government ownership, though it seems the government is slowly warming up to the fact that if they sell down their stakes they will realize some price discovery in several of the very undervalued listed companies and potentially kickstart a greater interest in the exchange as liquidity increases. Currently most locals are keen to invest into the corporate bond market as they seem to prefer cash flow over capital appreciation. Further, a better functioning stock market could encourage some of the very interesting private companies in the country to IPO, something which would be a first in the country’s history as all of the companies currently listed were part of the government’s privatization program.
After breakfast we took a walk through the downtown area where the famous statue of Manas, from the poem “The Epic of Manas” is situated, parliament and the old Ministry of Finance. Downtown Bishkek has a relaxed feel to it and many of the Soviet-era apartment blocks have been well maintained and are increasingly home to hip coffee shops and restaurants.