KASE Index ETF begins trading on Moscow Exchange
On 16 October 2018, Moscow Exchange (MOEX) started trading in the KASE Index Exchange Traded Fund (ETF) managed by FinEx Investment Management LLP.
The ETF is listed on MOEX’s Level 1 under the ticker FXKZ. Investment Company Freedom Finance is acting as the market maker.
The ETF is traded in roubles and linked to the share price denominated in KZT, since the ETF’s assets value is calculated in KZT. In the first day of trading, the ETF’s launch volume was RUB 320 mln (ca. USD 5 mln).
The KASE ETF comprises shares of the seven largest Kazakh equity issuers: Bank CenterCredit and Halyk Bank (financial sector), Kazakhtelecom and Kcell (telecommunications), KAZ Minerals and KazTransOil (commodities) and KEGOC (energy). The weight of every security in the fund will be similar to its weight in the KASE index.
The launch price of one share was KZT 1,000 (RUB 190).
Since 2014 the market capitalisation of the publicly traded Kazakh companies has increased 3.73 times to KZT 16.7 trln (RUB 3.2 trln) since 2014. Trading volumes of Kazakhstan’s equity market grew 1.7 times over the same period.
Anna Kuznetsova, Managing Director of the Equity and Bond Market, said:
"Moscow Exchange is a financial center for the Eurasian economic area, and it’s the main trading platform for currencies and debt instruments of EEC member countries. Now investors have access to an ETF that tracks the stock market index of one of the region’s largest economies. The KASE ETF is the first exchange-traded fund tracking the Kazakh equity index. We hope this new instrument will be popular among investors, particularly given the substantial growth of collective investments on the Russian market: notably, ETF trading volumes have doubled year-to-date compared to 2017."
Timur Turlov, CEO of Freedom Finance, said:
"This is the first ever ETF tracking the Kazakh market. I am confident that the instrument will be in demand from a wide range of investors. Institutional investors operating on Kazakhstan’s stock exchange will have an opportunity to quickly build an index portfolio. We are working now to also provide instruments for convenient hedging against risks of Kazakh securities. The launch of the KASE Index ETF will help promote the Kazakh equity market and improve its availability, and in my view Moscow Exchange is the optimal marketplace for promotion of the Kazakh market."
Oleg Yankelev, Senior Partner at FinEx Capital Management LLP said:
"The launch of this ETF on the Russian markets is a result of the joint efforts of Freedom Finance and FinEx. Freedom Finance provided unique expertise on the Kazakh market as well as the necessary brokerage infrastructure. FinEx ensured that the fund infrastructure works and that all required components of the ETF ecosystem interact with each other."
Currently, 15 ETFs under the Finex ETF and ITI Funds brands trade on Moscow Exchange’s Equity and Bond Market. The funds’ underlying assets are the MOEX indices, Russian corporate Eurobonds, shares included in the MSCI country indices, short-term US Treasury notes and gold. Total trading volume in the ETFs was RUB 15.8 bln in the first nine months of 2018 and RUB 9.3 bln in 2017.