You have been responsible
for the creation of the Baku Stock Exchange, which
is still
very young. As compared to your forecast at the
beginning, how satisfied are you with its
performance so far?
We have a very short history of the market economy.
We are trying to establish the modern financial
system in Azerbaijan and the securities market as
one of the most important part of this system.We
are cooperating with the National Bank of Azerbaijan,
with the Ministry of Finance and Ministry of Economic
Development. As you understand this process can't
be passed through in short period of time. But it
has to be mentioned that the main part of the basic
procedures are already done. We have created the
infrastructure of financial service market and especially
securities structure in it. In this regard the Baku
Stock Exchange has been established and it has a
real potential to become a source of development
of the securities market in the whole region. There
are also financial intermediaries and custodians
in the country. As you see the securities market
infrastructure in Azerbaijan is now ready for development
of investment process. We can mention Russian market
as an example. The infrastructure of the securities
market was created after the creation of the market
instruments in Russia. It caused turmoil in the
Russian economy afterwards, and that's why we have
chosen another way: we have completed the creation
of the legal base for the activities of securities
market participants. As the main part of this we
have presented to the Parliament amendments to the
legislation on securities market and joint stock
companies, keeping in mind the recommendation if
the EU experts. The main problem is small quantity
of instruments in the market at the moment.
When you say the infrastructure in the market
is ready it seems like you still in the waiting
position for the companies?
You are absolutely right. First of all we are
waiting for the creation of the accounting standards
which are very important. The Ministry of Finance
is preparing some necessary measures in this field.
There are about 2000 companies in Azerbaijan at
the present time. Providing of transparency of
the corporate activity is a necessity for the
development of the financial market. Besides this
the development of the corporative governance
is also very important and some steps have been
taken in this regard as well. We hope that the
new legislation will be helpful for solving of
the given questions. Strategic privatization,
of course, can also be of great assistance for
achieving our goals.
Major privatizations are still under process.
When do you expect the blue chips to appear on
the stock market?
The Ministry of Economic Development is in charge
of the privatization process in Azerbaijan. Nowadays
the level of interest of the foreign investors
is not very high. First of all, they are looking
for investing in telecommunication and oil industry.
But I think in the nearest future the privatization
of the telecommunication sector will start and
that is very important for the country. Foreign
consultants and experts have been invited to Azerbaijan
for this process. We are sure that during the
second program of the privatization the Ministry
of Economic Development will do its best for the
successful implementation of the program. We are
waiting for the secondary market of the shares
issued during the privatization.
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You have close cooperation
with the NBA and the Ministry of Economic Development.When
do you think blue chips should actually start coming
into the stock market?
It is difficult to tell exactly right now. We
predict it to happen in quite a short period of
time, perhaps in the next 3 months. As I mentioned
earlier the infrastructure of the market is almost
ready. The companies belonging to the Ministry
of Communication can be shown as an example-each
of them can be easily sold on the stock market.
The development of the secondary market is not
a problem at all, but the most important thing
for the economy of the country is the improvement
of the primary market. In this regard it can be
very helpful to use the Baku Stock Exchange in
privatization process.
How would you explain the BSE evolves as compared
to the neighboring countries?
There is no sense to compare Azerbaijan with
other countries, because of different levels of
economic development. There are no stock markets
in Georgia, Armenia and Turkmenistan. Regulatory
body in Georgia is created through the USAID,
which pays all expenses, created legal base and
even established the stock exchange. But the results
are not satisfactory. There are some normal companies
in Russia. But there is also the risk of turmoil,
for example YUKOS-SIBNEFT merger.
To what extent SCS plays a role to get those
players?
There are many things to do in this field. As
we mentioned some mistakes were made during the
privatization program. Due to those mistakes only
10 percent of the companies' shares are circulating
on the market. If the companies were able to trade
with securities they would realize that it is
much more helpful to trade the securities via
the Baku Stock Exchange. The most important thing
for them is to get some experience. Actually they
are making steps in this direction.
And also they may be waiting for others make
steps?
The next step for them is to become the participants
of the market. It is possible for some of them
to establish companies and to get licenses for
professional activity. The knowledge of these
guys is higher than the knowledge of some dealers
working for banks.
How many deals are usually made per day? How
can we measure that?
There is only one national depository center.
We can observe the deals with the shares. National
depository center changes the names of the owners
10 times more often than the deals in Baku Stock
Exchange. We know that market is about 30 mln
US dollars per month. Unlike FSA in the UK and
Securities and Exchange Commission in the USA
who only regulate securities markets, our task
is to facilitate the creation of the market and
then regulate it.
We heard that you have been the representative
of the Most-Bank in London. What did you learn
from this experience?
Before representing Most-Bank in London I had
gained much experience from working for the Bank
for Foreign Economic Affairs of the USSR and later
the Bank for Foreign Trade of Russian Federation.
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V.I.P. INTERVIEWS
