Prospective consequences of AIX and KASE merger

Abstract

Back in 1993, one of the first stock exchanges in Kazakhstan, KASE, was founded. Since the national currency, the tenge, was introduced on November 15, 1993, KASE's main task was to develop the national currency market. While AIX, which appeared in 2017, was focused on attracting foreign investors in the development framework of AIFC. After the announcement of the merger of these two exchanges, there were questions about the possible consequences of the merger, which this study addresses. The purpose of the study is to identify what kind of possible outcomes in terms of market efficiency and liquidity could appear because of the impact of KASE and AIX merger. In this article we evaluate possible outcomes by examining hypotheses through the interview and examined secondary data by case study and SWOT analysis. During research we discovered that hypothetical consequences depend on several factors such as regulatory and legislative framework, organizational structure and others. Also, during the interview, it was revealed that experts of different fields have different opinions, but each of them supports the fact that the merger of stock exchanges is an important part of economic development of Kazakhstan and still it will help to increase the liquidity of the market, attracting foreign investors. Moreover, results of SWOT analysis showed that the merger presents several strengths including the creation of a robust and more liquid market, enhanced optimizing processes, workflows and cost savings, while also facing challenges such as technical integration, aligning different regulatory frameworks and resistance from stakeholders. It creates opportunities to stimulate the economy and stock exchange indicators during a merger due to new opportunities in the development of Kazakhstani legislation and at the same time has a number of risks associated with the composition of the shareholders of one of the exchanges.