Anthony Espina –Pioneering Hong Kong-Kazakhstan collaboration

When Anthony Espina visited Kazakhstan for the first time in 2007, he felt right at home. “I was struck by how similar Kazakhstan was to Australia, from the open fields to the friendly people and multicultural society,” said Espina, a Filipino-Indonesian born in Hong Kong and educated in Australia.

Espina was attracted by the growth potential of Kazakhstan. On his first trip to the country in 2007, Espina, then owner of a Hong Kong-based securities dealer of the Hong Kong stock market and Chairman of the Hong Kong Securities Association, was part of a government delegation to promote Hong Kong Stock Exchange as a destination for listing Kazakh companies. Meeting the locals allowed him to glean a better understanding of Kazakhstan, which, as he learned, has an abundance of natural resources and is one of the best economic performers among all former republics of the Soviet Union in Central Asia. Espina immediately saw business opportunities.

His instinct proved right. A few months later, a Kazakh business contact approached him and sought his help to import TV set-top boxes from China.

“They had sourced set-top boxes from Ukraine and other former Soviet republics. The cost was US$40 to $50 per unit, compared with only $30 from Shenzhen manufacturers. So they wanted to source directly from China. But in those days, trade between China and Kazakhstan was rare and language was a barrier. Chinese companies required Kazakh buyers to settle all payments before goods were shipped out of China,” Espina said.

“For me, the deal was very simple. I only had to cross the border to liaise with mainland manufacturers and help with the shipping, making sure everything was right before and after payment was made,” he said. “Hong Kong is a long-established trading port and we have the experience to handle such deals.”

The collaboration was soon followed by more business opportunities. For instance, another Kazakh company enlisted Espina’s help to import agricultural chemicals. Espina also started to dabble in Kazakhstan’s financial sector, facilitating companies to complete merger and acquisition transactions. In 2012, a turning point came. The Italian bank UniCredit wanted to sell its stake in ATF Bank, one of Kazakhstan’s five largest banks by assets. At the time, Espina had been with a Kazakh company handling a merger and acquisition transaction. He then helped that company take over ATF from UniCredit. The deal was closed in early 2013 upon getting approval from the National Bank of Kazakhstan, and Espina has been ATF’s CEO since then.

For Hong Kong businesses interested in investing in Kazakhstan, Espina said patience and finding a reliable local partner are key. “There are many business opportunities in Kazakhstan, but it takes time to capture them.”

In September 2013, Chinese President Xi visited Kazakhstan and outlined for the first time the plan to build a Silk Road Economic Belt when he delivered a speech at Nazarbayev University in Astana. The Silk Road Economic Belt is a land-based component that, together with the oceanic Maritime Silk Road, forms the Belt and Road Initiative.

It is a development that has excited Espina till this day. “Central Asia occupies the biggest share of the Belt and Road. Kazakhstan, the biggest country in the region, has many advantages as far as the Belt and Road Initiative is concerned,” he said.

According to the Kazakh government, Kazakhstan and China have drafted more than 50 projects totalling US$27 billion and involving various fields, including the chemical, mining, infrastructure, energy and agricultural sectors.

Hong Kong, being a financial hub that has long been playing the role of financial intermediary to China, also stands to gain, Espina said. “Under the Belt and Road Initiative, Hong Kong is the ideal place for fundraising for Kazakh companies and foreign companies doing projects in Kazakhstan. Given Hong Kong’s financial knowledge, we can help Kazakh companies carry out feasibility studies and raise funds at lower financial costs.” he said. “Hong Kong is more than a ‘connector’. It is an international financial centre that Kazakhstan can use to build its own capital and debt markets.”

According to Espina, the Kazakh government has set a strategic goal to reduce its role in the economy through privatisation. In February 2018, he was appointed as advisor to the CEO and Chairman of the management board of Samruk Kazyna, the sovereign wealth fund of Kazakhstan. The fund is the holding company of all the major state-owned enterprises of Kazakhstan. Espina is currently advising on the privatisation of four companies of the fund. The state-owned companies to be privatised will be listed on the Astana International Exchange (AIX), which is part of the Astana International Financial Centre (AIFC).

Officially opened in July 2018, the AIFC is a planned financial free zone in Astana designed to open up the country for international business. Positioned as a financial hub in Central Asia, it has a special legal framework based on the principles of English law and the preferential tax regime, which will make it easier for foreigners to invest in Kazakhstan. Espina said the AIFC encourages Kazakh companies to list debt and equity securities there, and in the long run other Central Asian companies will also be attracted to list their shares on the AIFC. In the process of privatisation, Hong Kong can also play a part, he said.

“Hong Kong has played an important role in the privatisation of mainland state-owned enterprises. We have the knowledge, expertise and experience in facilitating the privatisation of mainland companies. We can do the same for Kazakhstan,” Espina explained.

“If Kazakh companies decide to dual-list their shares on the Hong Kong Stock Exchange (SEHK) and the Astana International Exchange (AIX), then Hong Kong-based financial services providers will definitely have to set up operations in the AIFC to advise on SEHK listing rules. Also, if Kazakh companies were to raise funds through Hong Kong from the Chinese mainland, for example, the financial services providers can also advise on taxation and other issues.

Espina called for the Hong Kong government, the Financial Services Development Council and the SEHK to take the initiative to promote Hong Kong’s advantages and bring Hong Kong-based financial services companies to Kazakhstan.