2nd CAREC Capital Markets Regulators Forum (CMRF):

Transcript:2nd CAREC Capital Markets Regulators Forum (CMRF)::
2nd CAREC Capital Markets Regulators Forum (CMRF): Working Together on Reforms and Innovation for Sustainable Development 31 October – 1 November 2023, Almaty, Kazakhstan CAREC Capital Market Landscape Study Contents of the Study Economic Development Overview Financial Sector Development Capital Markets Development SWOT Analysis—CAREC Capital Markets Cooperation Green and Sustainable Recovery Economic Development and Demographics CAREC economies began to rebound post pandemic. Growth in 2022 remained strong amid great uncertainties Countries at different stages of economic development have different accessibility to concessional funds Domestic capital markets and access to international capital markets become more important when a country moves to a higher developed stage Many CAREC countries are concentrated on agriculture, energy and other primary commodity production and exports, and remittances The process of turning the region from a landlocked to a land-linked will create huge potential for economic growth Except PRC and Pakistan, other countries have smaller population, Balance of Payments, Public Finance and Public Debt About half the CAREC countries registered balance of payments (BOP) deficits during 2019–2022 BOP situation roughly coincides with the country groups for their inability to access concessional loans in the World Bank and ADB All countries had to pursue countercyclical and proactive fiscal policies during the pandemic, resulting higher fiscal deficit and public debts G20 Debt Service Suspension Initiative (DSSI) helped free up some fiscal space from the suspension of debt repayments, including those to PRC Financial Sector Development Domination by banks and underdeveloped nonbanking sectors—capital markets are common Mismatches in terms of maturity, interest rates, and currency, resulting in boom-bust cycles Even in countries with adequate market infrastructure, capital markets are not active Weak institutional capacity in some CAREC countries generally leads to an overemphasis on stability at the expense of development and innovation Capital Markets CAREC countries’ stock exchanges vary greatly in size and functions. One common feature is that equity markets are the least active, as compared to Gov’t and Corp bonds and foreign exchanges operations Government bonds are by far the biggest segment of capital markets in CAREC countries and interbank markets also play a bigger role Most CAREC countries are just beginning to develop green and climate change bond markets Money markets are inactive in many CAREC country due to lack of well-developed bond markets, the poor liquidity management in banks, inadequate monetary policy transmission mechanisms, and dominance of direct monetary controls Some countries have commodity exchanges for