Market Efficiency of Listed Companies: Kazakhstani Case of Investment in the Public Limited Company vs Deposit in the Second-Tier Bank

Abstract

The paper examines the attractiveness of two different investment alternatives for individual investors. It involves purchase of KAZ Minerals PLC shares versus placement of investor’s funds in second-tier bank’s (Kaspi Bank JSC) deposit in the Republic of Kazakhstan.

KAZ Minerals PLC (hereinafter the “KAZ Minerals”) takes origin from 1930 and as for now it is leading international company for extraction and processing of natural resources. KAZ Minerals is the biggest Kazakhstani company that produces cupper in Kazakhstan and one of the biggest producers in the world. KAZ Minerals is making business in Kazakhstan and it is registered in London and Hong Kong Stock Exchanges.

The second-tier bank, which time deposits will be considered for investment as an alternative to investment in the shares of KAZ Minerals is JSC Kaspi Bank.  JSC Kaspi Bank (hereinafter “Kaspi Bank”) started its operations in 1991, and today it is the one of the market leaders in provision of banking services and other financial products to large and medium-sized corporations, as well as individual clients, in all sectors of Kazakhstani economy.  The choice of the bank is based on results of third quarter of 2019, which showed that Kaspi Bank is not merely one of the largest private banks in CIS, but also has a leadership position as a lender in Kazakhstan by total assets. One more reason for comparing the deposits of this particular bank to the investment in stocks of KAZ Minerals is the low risk level, as the bank’s management emphasizes the importance of asset quality and liquidity management, as well as maintenance of high operating efficiency.

Thus, the paper compares the attractiveness of investment in the stocks of KAZ Minerals PLC versus investment of money in deposit of Kaspi Bank JSC in terms of their profitability and risk level.