On Clubs, Financial Hubs and Vicious Circles

On Clubs, Financial Hubs and Vicious Circles

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“I refuse to join any club that would have me as a member,” Groucho Marx famously said. Indeed, people may be reluctant to join new ‘clubs’ that are yet to establish their reputation – be they countries, industries or financial hubs. But, if so, how do you develop a newly independent country when your best professionals vie for jobs in the more prestigious clubs, such as the Silicon Valley or the City of London? Or, how do you start a new financial hub when major investors and companies trade elsewhere?


When boarding the plane to Washington DC in the summer of 2006, Amina Turgulova knew she may not be returning to her native Kazakhstan. At least, not any time soon. Only 28, Amina was leaving behind a well-rooted family (her grandfather, Yerik Asanbayev, was vice president in Nursultan Nazarbayev’s first administration) and what many considered to be a dream job with the US embassy in Almaty. Yet, after almost 10 years with the embassy, she felt the urge to move on.

Amina’s international ‘career’ started at a young age, as a Future Leaders Exchange (FLEX) student in Lebanon, Oregon – a life-changing event. The year was 1995, and the US seemed like another planet; she recalls being shocked at the sight of a US-centered map of the world cutting Eurasia in two, but this was the mildest part of the cultural shock she suffered as a 17-year-old Kazakh girl in the US.

Upon her return, she did not behave or dress up like any of her former classmates. The jeans and loose shirts Amina sported were at stark contrast with the white-blouse-and-dark-skirt convention of the time. “You’ve lost something of your Kazakh identity, Amina,” her mom observed. “But look how much I’ve gained,” was Amina’s response.

Amina quickly landed her first lucrative gig – as an interpreter for the Indian Ambassador’s personal chef. The job came with serious perks: a personal car, 200$ per week, and plenty of delicacies to taste. Just around the corner was a 10-year career with the US Embassy’s human rights and democracy office.

“I loved what I was doing – what can be better than helping good people?”, Amina tells me when we meet at the Tbilisi Rooms Hotel, “but, having reached the top rank for a local embassy employee, I had nothing to aspire to”.

As many mid-career professionals, Amina started exploring options to study abroad. Knowing exactly what she was doing, she applied to only three US schools and received two admission offers. One from Tuft’s and another – which she accepted – from Johns Hopkins University’s School of Advanced International Studies (SAIS).

As a SAIS graduate, Amina knew she would be sought after by Kazakh employers. And since her studies were financed by the Kazakh government’s Bolashak scholarship, she was even expected to work in Kazakhstan for at least five years upon graduation. Yet, Amina had her sights set on a much more lucrative club – the World Bank. Why promote democracy and human rights in Kazakhstan when you can do it on a global scale? While perhaps good for Amina, her decision not to come back was not great news for Kazakhstan, which counted on every Bolashak scholar to help take the country to the next level. There you have it, a classical chicken and egg story.


Speaking at the closing ceremony of EXPO 2017 in Astana, Kazakhstan’s President Nazarbayev unveiled new plans for the exhibition’s magnificent infrastructure – to serve as a financial hub for the vast Eurasian continent. The Astana International Finance Centre (AIFC) was set to compete with the likes of Dubai International Finance Centre (DIFC) and Shanghai’s Lujiazui district.

But how could a new financial hub attract large buyers and sellers from more established trading platforms?

First, it was necessary to set AIFC ‘membership fees’ at a very low level. In other words, do everything its competitors did, but cheaper. This included establishing AIFC as an independent jurisdiction governed by the English common law, with its own court (chaired by an ex-Chief Justice of Wales and England) and arbitration system; adopting NASDAQ’s trading technology; reducing listing costs to the minimum, well below the international norm of about 4%; exempting resident companies from practically all taxes (corporate income tax, income tax for foreigners employed by AIFC participants, property tax, land tax, tax on capital gains, dividends or interest); and, finally, granting residents a 2-year exemption from rent.

Yet, although necessary, spectacular architecture and low ‘membership fees’ were not a sufficient condition for Astana’s financial hub to become a resounding success. Large companies, including Kazakhstan’s own, could be hesitant to list at Astana International Exchange in the absence of large international buyers – sovereign funds and investment banks. The latter, however, would be keen to participate in a market only once it offered attractive instruments – government bonds, as well as debt and equity issued by large companies. Hence, another Catch 22 situation.


Amina Turgulova did not even try to realize her World Bank dream. Instead, she decided to go home and “do something real” for her country. Two people, she tells me, influenced her decision. The first is Francis Fukuyama, Amina’s professor and educational advisor at SAIS, who encouraged her to think that democracy and human rights are best promoted through distribution of wealth and property rights rather than handouts and grants. The second influencer is Kairat Kelimbetov, whose passionate TV interview she happened to watch in 2006, while still a student at SAIS. Mr. Kelimbetov, Kazakhstan’s preeminent economist and then head of Kazakhstan’s sovereign wealth fund Samruk-Kazyna, talked about the urgent need for young Kazakh talent to come back and help modernize the economy. Moved by this, Amina responded to the challenge.

Amina tried to get a job with the Kazyna Foundation, but her resume was apparently lost in the pile. She went on to work as the head of international relations for the Kazakhstan Stock Exchange (KASE) in Almaty, learning on the job while helping integrate KASE into the World Federation of Exchanges (WFE). The highlight of Amina’s tenure with KASE was a 6-month EBRD-financed project giving her a unique chance to work with professionals from an Austrian boutique firm who literally settled in her office. The project produced a set of 19 recommendations – approved by KASE’s board – on how to increase KASE attractiveness for international investors and increase its liquidity.

In early 2016, after almost 8 years with KASE, Amina had finally received a phone call from Kairat Kelimbetov who was then tasked with the job of establishing a new financial hub in Astana.
"I’ve never told Governor Kelimbetov about his role in my decision to come back”, Amina tells me. “You may have done so just now”, I smile in response.


Amina joined AIFC in March 2016 as Deputy CEO of Astana International Exchange (AIX) and Head of AIX Project Management Office. Moving from Almaty to Astana was no fun; neither did she enjoy the pay cut it involved. Yet, she was enormously motivated to work with Kelimbetov and close yet another important loop in her life. In the short time since joining, Amina set up a new stock exchange – AIX – which launched its first Eurobonds and IPOs in November 2018. “I managed to bring Shanghai Stock Exchange and Nasdaq as the main strategic partners,” she tells me, “and I am very happy to have successfully accomplished whatever tasks I was trusted with by governor Kelimbetov.”

Amina is convinced that AIFC will be a great success. Yes, she agrees that it is not yet liquid enough to outcompete some of the larger exchanges. The prices Kazakh companies can fetch in Astana today may be lower than what they would get in London or Shanghai. But, the Kazakh government should look beyond the narrow interests of specific state-owned companies. Only in this way will it be able to break the vicious circle of overdependence on banking capital. By creating an alternative to banks, AIFC will serve the needs of many more companies from the entire region that are not large enough for the established exchanges. It may take time, but the market’s liquidity will eventually increase, leading to higher prices and improving the conditions for future privatizations and IPOs. This, in turn, will lead to additional job creation, helping Kazakhstan prevail in the global competition for talent.

*     *     *

Supported by a generous scholarship granted by a group of international philanthropists, Amina’s 18-year-old daughter Adel is currently a student in United World College of South East Asia in Singapore. Amina’s challenge as a mother and senior business executive is to make her country a ‘club’ attractive enough for bright Kazakh kids of her daughter’s generation not to be caught up in the vicious circle of brain drain and emigration.


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