In a recent ION Influencers fireside chat, Ivan Serdyuk, Board Member of Valor Capital and former Central Bank of Kazakhstan official, detailed the country’s ambitious, multi-year campaign to transform its financial markets and attract global capital. Moving beyond its resource-rich image, Kazakhstan is executing a disciplined strategy to build a deep, transparent, and globally integrated local bond market.

With nearly $300 billion in GDP and over $100 billion in combined bond market outstanding, Serdyuk outlined the macroeconomic stability, infrastructural overhaul, and persistent challenges that define this pivotal investment moment.

Here are the key topics and takeaways for global fixed-income investors and emerging market analysts.

The Macro Backdrop: Resilient Growth Amidst Persistent Inflation

Serdyuk painted a picture of a resilient, growing economy navigating familiar emerging market challenges.

• Strong Fundamentals: Kazakhstan’s population has grown to 20 million, with a stable workforce of 10 million. Nominal GDP is projected to hit $300 billion in 2025, with per capita GDP nearing $15,000, signaling a solid domestic market.

• The Inflation Battle: Growth is robust (6.2% in H1 2025), but inflation remains the “key challenge,” stubbornly high at 11-12.5%, driven by food, fuel, and utility costs. In response, the central bank has maintained a hawkeyed policy rate of 16.5%.

• FX Volatility & The Safety Net: The tenge (KZT) has experienced volatility, recently trading around 550/USD. However, the country boasts a formidable buffer: combined international reserves of $116 billion, bolstered by central bank gold purchases, providing a critical shield against external shocks.

The $100 Billion Bond Market: A Five-Year Transformation Story

The core of the discussion was Kazakhstan’s concerted effort to build a world-class bond market from the ground up.

• The “North Star”: Inclusion in the JP Morgan GBI-EM Index. This goal has driven a total infrastructure overhaul. “The primary goal… is to be included in the JP Morgan GBI index,” Serdyuk stated, which has required aligning “local infrastructure, legal settlement, trading… with global standards.”

• Opening the Gates to Global Capital: Key milestones include enabling DVP settlement and making tenge-denominated government bonds accessible via Clearstream (with Euroclear integration underway). These changes have had a tangible impact: foreign holdings of government securities have rebounded from a low of $795 million in 2022 to $2.2 billion in August 2025, growing at 34% annually.

• Building the Ecosystem: A new Debt Management Office is being established to unify strategy. Plans are in motion to institute a primary dealer system, launch an e-bond platform for OTC trading, and create a unified data portal for investors.

• The “Bond Market Guide”: A landmark initiative driven by the Asian Development Bank, this comprehensive manual (to be published in 2026) will aggregate all market structure, regulatory, and tax information into a single source—a transparency tool aimed squarely at easing due diligence for international funds.

The FDI Engine and Investor Mindset

Serdyuk highlighted that reform is already translating into capital flows.

• Strong Inflows: From 2020 through Q1 2025, Kazakhstan attracted $117 billion in gross FDI, with a net inflow of $17 billion. Sectors are diversifying beyond the dominant extractive industries (40% of inflows) into manufacturing and trade.

• The Investor’s #1 Concern: When engaging global investors, the primary focus is on “the stability of monetary and fiscal policy.” The high-interest-rate environment, while combating inflation, creates an attractive real yield proposition on government bonds, which Serdyuk noted is a key draw.

The Human Capital and Legal Foundation

Serdyuk emphasized that infrastructure is meaningless without talent and a credible legal framework.

• Cultivating Local Talent: A significant effort has gone into educating local professionals on global market practices, settlement, and investor communication. The Astana International Financial Center (AIFC) acts as a talent magnet, hosting firms like Valor Capital and combining local expertise with international standards.

• The Legal Dual System: Kazakhstan maintains its stable civil law system while the AIFC operates on a separate, common-law-based framework, providing a familiar and secure legal environment for international financial firms.

The Road Ahead: Challenges and Global Inspiration

• The Biggest Challenge: For Serdyuk, echoing advice from a former Bank of Japan governor, the paramount challenge is “the team.” Building and retaining a professional cadre of market practitioners is the foundational step for all other progress.

• A Diversified Blueprint: Kazakhstan isn’t copying a single model. Serdyuk cited drawing lessons from a diverse set: Malaysia (Islamic finance & bond markets), Hungary (yield curve construction), and even the cautionary tales of Nigeria and Egypt regarding index inclusion and FX management.

Key Takeaways for Investors:

• A Structured Opportunity: Kazakhstan is not a speculative bet but a country executing a detailed, transparent roadmap for financial market development. The high nominal yields are backed by substantial reserves and reform momentum.

• Look Beyond the Tenge Volatility: FX fluctuations are managed within a framework of strong reserves. The real story is the structural opening of the capital account and bond market.

• Due Diligence is Easing: Initiatives like the forthcoming Bond Market Guide are explicitly designed to lower the research burden for global funds, signaling a mature, investor-friendly approach.

• The Bottom Line: Ivan Serdyuk presented Kazakhstan as a frontier market graduating to emerging market sophistication. For fixed-income investors seeking yield with a documented path to greater liquidity and integration, Kazakhstan’s $100 billion bond market represents a compelling, evolving opportunity built on a foundation of macroeconomic resilience and deliberate reform.

Key timestamps:

00:06 Introduction to the Fireside Chat
02:28 Overview of Kazakhstan’s Economy
04:01 Foreign Exchange Market Dynamics
08:11 Demographics and Economic Growth
13:32 Kazakhstan’s Bond Market Overview
18:12 Enhancing Bond Market Transparency
21:58 Challenges in the Financial Ecosystem
23:27 Learning from Global Economic Models
25:45 Conclusion and Closing Remarks