Overall: Best BRI project or initiative 2019
Astana International Financial Centre (AIFC)
Kazakhstan is at the heart of the Belt and Road Initiative, both geographically and strategically. The project was first announced by China’s president, Xi Jinping, in the country’s capital Nur-Sultan in 2013; two of the six trade corridors pass through the country.
Kazakhstan is currently implementing 55 joint BRI-linked projects with China in industry, transport and logistics, and trade between the two countries has reached $30 billion in the last three years.
Policymakers in Kazakhstan want to build on this strategic relationship to create a regional centre in order to facilitate investment and financing for BRI projects: to further that goal, former president Nursultan Nazarbayev opened Astana International Financial Centre (AIFC) in the country’s capital in July 2018.
The AIFC, currently under the leadership of Kairat Kelimbetov, is one of the most ambitious initiatives in the BRI universe; the intention was to create a leading financial centre combining state-of-the-art technology with international standards of governance.
It includes the first court under English common law in the former Soviet Union, which has jurisdiction over all AIFC activities and is presided over by British judges led by Lord Woolf. It also has an International Arbitration Centre. An independent regulator, the Astana Financial Services Authority (AFSA), is chaired by the UK’s Lady Barbara Judge.
The AIFC has a new stock exchange, Astana International Exchange (AIX), which was launched in November and has the Shanghai Stock Exchange, Nasdaq, Goldman Sachs and the Silk Road Fund as its strategic partners.
The exchange’s infrastructure allows trading in securities, commodity and derivative instruments denominated in tenge, roubles, dollars and renminbi.
Trading on AIX began with the $450 million IPO of state-owned Kazatomprom, the world’s largest uranium producer. The exchange will be the main platform for the planned privatization of a further $70 billion of Kazakh state assets.
The AIFC also aims to become a regional hub for renminbi clearing and settlement. The centre has received approval for qualified institutional investors from China to buy renminbi-denominated products on AIX and for China’s brokers to become trading members of the exchange.
The AIFC branch of Altyn Bank, which is a subsidiary bank of China Citic Bank, has the capacity to provide cross-border renminbi clearing services to all current AIFC market participants. Two leading brokers from Hong Kong – China International Capital Corporation and Shenwan Hongyuan – are AIX trading members.
Other recent initiatives include the establishment in January of the Belt and Road Market (BRM) for entities that want to raise financing for BRI-related projects; it has already attracted support from Chinese investment banks, lawyers and credit rating agencies.
An inaugural renminbi-denominated bond issue is scheduled for the third quarter of this year, although the borrower has not been announced yet, while IPOs from local and Chinese companies are also in the works.