Despite celebrating its 30th anniversary, Uzbekistan's stock exchange still sees its bond market in its infancy, with only 33 issuances totaling around 572 billion soums. While reforms have boosted the market, competition from bank deposits hinders bond growth due to their guaranteed returns and liquidity.
Compared to other countries, Uzbekistan's bond market is underdeveloped, with only $2 per capita compared to $200 in Kazakhstan and $973 in Georgia. Foreign markets thrive due to experience in foreign currency bond issuances, providing stability and attracting a wide range of investors.
However, local investors remain cautious due to currency fluctuations and lack of knowledge about macroeconomics. To boost the market, allowing local companies to issue foreign currency bonds could reduce interest rate differentials and encourage long-term investments.
Introducing foreign currency bond issuances, along with easing issuance restrictions and simplifying documentation procedures, could propel Uzbekistan's market forward, offering a diverse range of instruments for local issuers and investors.
