INTRODUCING KAZAKHSTAN STOCK EXCHANGE INC KASE Relevant as

INTRODUCING KAZAKHSTAN STOCK EXCHANGE INC. (KASE) Relevant as of July 1, 2007

COEVAL OF TENGE … KASE was established at November 17, 1993 under the name of Kazakh Interbank Currency Exchange, two days after the launching of tenge – new legal tender of Kazakhstan. Now, that day (November 15) is celebrated as the official annual holiday "The Day of Financiers". "Old" tenge (1993– 2006) "New" tenge (since 2006)

YOUNG AND SINGLE … KASE – non-commercial joint-stock company with the 59 shareholders – National Bank of Kazakhstan (the largest shareholder), banks, brokerage firms, asset management companies, pension funds and other professional financial institutions. All of them have only one vote each*. * Item to discuss.

YOUNG AND SINGLE … (2) Today and finally KASE is the single universal financial exchange in Kazakhstan with the brief but bright history: 1993 – first trades with the foreign currency (US dollars) 1995 – first trades with the T-bills 1996 – first trades with the derivatives (KZT/USD exchange rate futures) 1997 – first trades with the listed equities 1997 – first trades with the government stacks of shares

YOUNG AND SINGLE … (3) 1998 – first trades with the eurobonds of Kazakhstan 1999 – first trades with the listed corporate bonds 1999 – first trades with the municipal bonds (since 2005 the issuance of these bonds is prohibited) 1999 – launching of the direct repo market 2001 – first trades with the supranational (IFO) bonds 2001 – launching of the automatic repo market (the most massive and active sector of the KASE market) 2002 – first trades with the promissory notes

YOUNG AND SINGLE … (4) 2003 – first trades with foreign T-bills (Russia 2028 & Russia 2030 ) 2006 – first trades with foreign corporate bonds (JP Morgan and Merrill Lynch) 2006 – IPO of Kaz. Munay. Gas Exploration–Production shares with the use of KASE settlement system 2006 – secondary distribution of KAZAKHMYS PLC (UK) shares with the use of KASE settlement system

IMPRESSIVE DYNAMICS …

IMPRESSIVE DYNAMICS … (2)

UNIVERSAL EXCHANGE … In total, repo (money) market takes 66. 5% of general KASE turnover

UNIVERSAL EXCHANGE … (2) KASE serves the markets of: ü direct and automatic repo with public and corporate securities ü foreign currencies (US dollar, euro, russian rouble) ü public securities of Kazakhstan issued by the National Bank, municipalities and Ministry of Finance (including international bonds of Kazakhstan) ü supranational bonds and foreign T-bills ü promissory notes ü equities

VARIETY OF CORPORATE BONDS ü "regular" domestic bonds (nominated in tenge or foreign currencies, with discount or coupon, with fixed or floating coupon) ü international bonds of Kazakhstan issuers ü agency bonds (with the tax regime equal to the tax regime of T-bills) ü infrastructural bonds (secured by the government guarantee) ü bonds of foreign issuers (previously registered outside Kazakhstan) ü soon: bonds of foreign issuers (registered in Kazakhstan)

DOMINATION OF REPO AND FOREX MARKETS KASE repo market is specially designed for domestic purposes – to satisfy the needs of local pension funds and banks in short-term money borrowings and lendings. KASE foreign currencies market – the basic trading site for the National Bank of Kazakhstan to regulate the exchange rate of tenge. KZT/USD: the KASE exchange rate today = official exchange rate tomorrow.

LISTED COMPANIES (by categories)

LISTED COMPANIES (in total)

MARKET CAPITALIZATION (USD bln)

LISTED COMPANIES (by structure)

"PURE" CORPORATE SECURITIES MARKET Total KASE turnover for 6 months of 2007 with the equities – 4, 560. 0 USD mil, with the corporate bonds – 2, 232. 3 USD mil.

"PURE" CORPORATE SECURITIES MARKET (2) In 2007 average daily KASE turnover with the equities – 36. 8 USD mil, with the corporate bonds – 28. 4 USD mil.

"PURE" CORPORATE SECURITIES MARKET (3) The main problems are: • lack of free-float equities (the heritage of case-bycase privatization) • conservative policy of main domestic investors ("buy bonds and hold till maturity") Nevertheless. .

CHAMPION GROWTH (in 2005– 2007) Index KASE_Shares demonstrated the rapid growth: 11. 1 times (for the period Jan. 05, 2005 – Apr. 19, 2006) and 1. 2 times (for the period Apr. 19, 2006 – Feb. 12, 2007), due to the appearance of new investors’ class – mutual funds and individual persons.

INVESTOR BASE … Institutional investors assets at the end of 2006 reached 78. 5 bln USD, 89. 0% of them are banks assets, 9. 1% – pension assets Principal indicator is growth of unit investment funds assets (at the end of 2006 – 383 mln USD)

INVESTOR BASE (2) Consequences of excess investor base is the real “zero" yield of debt instruments for investors

ADVANCED TECHNOLOGIES KASE uses it’s own trading platform: ü on-screen based electronic "Server – Client" system ü remote access ü electronic signature and electronic documents circulation ü traffic encryption ü on-line data saving Central Depository is the KASE subsidiary: ü DVP

IN THE FUTURE … • Waiting for the IPO of the largest Kazakhstan banks and producers (according to the Securities Law, at least 20% of the local shares being placed must be suggested at the domestic market for purchase) • Administrating the Special trading site of the Almaty Regional Financial Center (set-up to attract foreign issuers and investors) • Welcoming the new listing companies • Waiting for the IFOs to place their bonds in Kazakhstan • Ready to introduce T+n settlement basis for the foreign operators (only for eqities)

CONTACT US … Internet: e-mail: www. kase. kz kase@kase. kz phone: (+7 327) 237 53 00, 272 98 98, 237 53 11, 272 06 00 fax: (+7 327) 296 64 02, 272 09 25 address: 291/3, Dostyk av. , Almaty, Kazakhstan