Uzbekistan’s Capital Market: What Works and What Still Holds It Back
What opportunities are emerging for investors in Uzbekistan? This was the key question at the opening session of the conference «Uzbekistan’s Capital Market: New Opportunities for Investment.» Government officials, investment companies and capital market leaders discussed shifting investor priorities along with the impact of policy, technology and infrastructure. The event was organised by Kursiv Uzbekistan.
«We are not yet in the WTO. This is your window of opportunity» — Mansurjon Rasulov
Uzbekistan remains one of the few countries that has yet to join the WTO and this could play to the advantage of prospective investors. Mansurjon Rasulov, the Acting Director of the Agency for Attracting Foreign Investment under the Ministry of Investment, Industry, and Trade of Uzbekistan, highlighted that companies entering the market before WTO accession could secure unique benefits.
Since reforms began in 2017 the country has consistently maintained its chosen path. According to Rasulov, early concerns that Uzbekistan might revert to a closed economic model have proven unfounded. Eight years of consistent policy and institutional reforms have strengthened the country’s image as a reliable partner.
He also noted how perceptions of Uzbekistan have evolved since 2020. Despite the global economic downturn, Uzbekistan and the broader Central Asian region demonstrated faster recovery. This was possible due to reforms launched even before the pandemic such as currency liberalisation and opening strategic sectors to foreign investment.
The effect of reforms tends to accumulate and manifest with a time lag. This became especially apparent during periods of turbulence. Consistency, Rasulov stressed, is what sets Uzbekistan apart from other emerging markets.
«Uzbekistan is technologically ahead of Europe» — Anvar Rasulov
Anvar Rasulov, Chairman of the Board at Ansher Investments LLP, observed a shift in how private investors view Uzbekistan. They are no longer looking for a one-off win. Today they are building full-fledged ecosystems including banks, fintech services, marketplaces and logistics.
Investors operate independently
Investors no longer ask local partners to co-invest. What matters is that the acquisition process is well-structured. Once the deal is closed they proceed to develop the project on their own.
«Investors say: ‘Help us close the deal and then step aside. We will handle the rest.’ That’s a major shift,» he noted.
Flexibility is Uzbekistan’s advantage
According to Rasulov, competitiveness is driven not only by low tax rates. Income tax stands at 12% in Uzbekistan compared to 43% in Italy. Technology is another advantage. Many innovations that have been standard in Uzbekistan for a decade are only now being introduced in European banks.
More investor interest than expected
Gold mining remains a stable sector. Even smaller companies can access deposits with reserves of 10 tonnes or more. There is also growing demand for both commercial and residential real estate though bureaucracy remains a barrier.
While the M&A market is less transparent than the stock market it can still be monitored for example through data from the Antimonopoly Committee.
«The securities market in Uzbekistan has enormous potential. We need to work on this.»
«We’re a toothless regulator and we know it» — Vyacheslav Pak
Vyacheslav Pak, First Deputy Director of the National Agency for Perspective Projects (NAPP), outlined key barriers for investors. He also shared ongoing efforts to develop the market and stressed the need for instruments that are not yet available but are in high demand.
What the market inherited and why listed companies shrank fivefold
In the early 2000s there were more than 3,500 joint-stock companies (JSCs) in Uzbekistan. Today there are around 650. Despite this past efforts focused heavily on equity markets while globally the trend was toward bonds.
«We’ve started to change the paradigm. We moved away from equities and began promoting the bond market. Initially it was worth around UZS 300 bn (USD 23.7 mln). Now it stands at UZS 1.9 trillion (USD 149.9 mln). The instrument is growing.»
Weak investor protection and limited enforcement powers
Pak noted that the risk assessment system is still non-functional. The regulator lacks sanctioning powers and the ability to act swiftly.
«Compared to the Bank of Russia we’re a toothless regulator. Even fines were removed in favour of liberalisation. But if we want foreign investors they need to see that their interests are protected.»
Shortage of legal instruments
People in Uzbekistan buy foreign stocks via unofficial platforms increasing fraud risk. The solution lies in creating a legal exchange platform. A presidential decree already foresees a pilot launch.
Pak also emphasised the need to issue bonds in foreign currency. Banks can provide FX loans but cannot yet issue corporate bonds in foreign currencies.
Why investment funds aren’t working
Investment funds are virtually inactive. According to Pak they are overregulated to the point of being unviable. The number of JSCs has also been artificially inflated due to mandatory re-registration requirements for some market players.
«We have 52 key facts that must be disclosed. It’s too much. It affects bond issuers as well.»
What the regulator expects from market participants
NAPP circulates draft regulations via the National Association of Investment Institutions (NAII) and other channels but receives little feedback. Pak called on market players to engage more actively.
«We want to hear proposals: what tools are needed what’s getting in the way what should be changed. This is a two-way street,» he concluded.
Demand from both businesses and individuals is already present. But without proper infrastructure and legal foundations the market cannot grow. «We must go through this together.»
«The capital market is now open to everyone» — Georgiy Paresishvili
George Paresishvili, Chief Executive Officer of Tashkent Stock Exchange, began with the year’s key achievement.
«We recorded a trading volume of UZS 22 trillion (USD 1.7 bn) on the Republican Stock Exchange Tashkent. This is the highest figure in the exchange’s 31-year history,» he said.
A key factor behind this growth was the launch of mobile apps and a new API which enabled investors to open brokerage accounts directly from their smartphones. This has dramatically increased retail participation and made the market more accessible.
International integration has also improved: trading data is now available in real time via Bloomberg and Refinitiv terminals strengthening the exchange’s credibility among global players.
Paresishvili added that for the first time in its history the Uzbek exchange received a direct foreign investment from the Korea Exchange which injected UZS 5 bn (USD 394,300) in equity capital.
Looking ahead special attention is being paid to developing the bond market and individual investment accounts (IIAs). Current law limits bond maturity to one year making them unattractive for investors. Paresishvili believes that removing this cap and introducing tax incentives for IIA-generated income could increase yields up to 32%.
He stressed that if these reforms are enacted they could pave the way for successful IPOs by NMMC and other major issuers attracting interest from across the region.
«No retail investors means no IPO» — Tolibjon Mirzakulov
Tolibjon Mirzakulov, startup founder of Jett.uz, drew attention to the untapped potential of Uzbekistan’s capital market. Despite the growth of fintech and an overheated banking sector securities investment remains limited. He described this space as a «blue ocean» with inevitable growth ahead.
A key barrier to IPO development he argued is the lack of retail investors. Without them it is impossible to build a viable IPO pipeline or offer exit opportunities for venture capital.
Data shared by Mirzakulov shows a positive trend: in 2022 average monthly inflows reached UZS 430 mln (USD 33,900) with UZS 250 mln (USD 19,700) retained after withdrawals. By 2024 this figure had quadrupled with UZS 1.3 bn (USD 102,500) retained monthly. User activity also surged with the average investor now making twice as many trades for twice the amount.
Bonds are attracting particular interest. In two years their share of all transactions grew from 3% to 40% reflecting rising trust among retail investors.
Mirzakulov endorsed IIAs as a growth driver. He believes the «IIA + bonds» combination will be a key force over the next few years. He also expects banks to issue more bonds to compete for retail clients by offering higher yields.
«Banks will issue their own bonds to retain clients and attract retail. Rates are already higher than deposit returns. With IIAs it’s even more attractive,» he said.
In closing he expressed confidence that Uzbekistan’s stock market could reach one million active participants within one to two years.
Experts agree on one thing: Uzbekistan’s capital market holds vast potential. But unlocking it requires reform engagement from stakeholders and an influx of retail investors. The sooner these issues are addressed the stronger the country’s global position will be.
