Uzbekistan Eyes Bond Market and Major IPOs in Capital Market Expansion

The Tashkent Stock Exchange has ambitious plans to expand Uzbekistan’s capital market, focusing on the bond market, individual investment accounts (IIAs) and high-profile IPOs.

«Our bond market is far too small for a country like Uzbekistan. In essence, it barely exists,» said George Paresishvili. He believes regulatory changes are needed: «At the moment, exchange-traded bonds are limited to a one-year maturity. That’s unattractive. If we allow longer terms, they will become more popular.»

The introduction of IIAs is expected to be a game-changer. Citizens will be able to invest up to 127 mln UZS per year — about 10 thousand dollars, tax-free. That’s more than the average deposit in the country, according to Peresishvili.

The real impact will come from combining IIAs with bond investment. «A bank offering 20% interest on deposits could instead issue bonds via an IIA structure. Thanks to tax benefits, the effective return for the investor would be 32%,» Paresishvili emphasised. «There’s no banking bond in the country that offers such a return.»

Other upcoming reforms include facilitating mortgage bonds, and encouraging international financial institutions like the EBRD, IFC and ADB to issue local currency bonds through simplified processes.

Major IPOs are on the horizon. As per a presidential decree, companies such as NMMC and the National Investment Fund of Uzbekistan, managed by FUNTAL, are preparing for public offerings.

These offerings may include dual listings, both in Tashkent and abroad via depositary receipts. «Extensive legal changes are being prepared. If adopted, there’s no reason these IPOs shouldn’t be successful,» he concludes.

Kursiv also reports that 2024 became a record-breaking year for the Uzbek stock market with $170 mln in trades and 500 thousands transactions. Tashkent Stock Exchange also connects to Bloomberg via API for real-time data.