National Bank: Growth of National Fund's Foreign Exchange Assets Ensured by Investment Income

Growth of foreign exchange assets of the National Fund is ensured by investment income – National Bank

Foreign exchange assets of the National Fund demonstrated growth based on performance for the first half of 2025. Deputy Governor of the National Bank Aliya Moldabekova told which investment decisions and asset classes brought income to the National Fund and how the market "behaved" in general.

– What are key results of the first half of the year for foreign exchange assets of the National Fund in figures?

– In late June 2025, volume of foreign exchange assets of the National Fund made $60.3 billion. Thus, total portfolio volume, minus the target requirements under the National Fund for Children program, has soared by $1.5 billion since the start of the year.

– How was the situation on global financial markets shaped in general during this period?

– Financial markets grew steadily against the background of the global economic recovery and weakening of inflationary pressure in most regions. The markets were supported by both stabilization of macroeconomic indicators and moderate expectations for monetary easing in a number of countries.

There was also some volatility. In April, financial markets experienced short-term turbulence due to introduction of trade tariffs by US President Donald Trump. However, the markets quickly recovered due to softening rhetoric and signals of negotiations on trade disputes.

Overall, our balanced approach to management of the National Fund and relative stabilization of the markets allowed us to receive investment income, according to preliminary data, in the amount of $4.7 billion or 7.8%.

– Speaking of asset classes, what demonstrated the highest return in portfolio of the National Fund?

– Positive dynamics continue in the global stock market. This was facilitated by stable corporate profits, productivity growth, as well as reduced uncertainty in the monetary policy. Companies focused on domestic demand and technologies that benefit from digitalization and introduction of artificial intelligence grew especially dynamically. Investment income of the National Fund's stock portfolio in the first half of the year was $1.9 billion or 9.8%.

Portfolio of government bonds of developed countries showed growth of $1 billion or 6.7%. Positive dynamics of this class of assets were exposed by such factors as a decrease in inflation in developed countries and expectations of a start of a cycle of reducing key rates by leading central banks. Another growth factor was appreciation of a number of major currencies of developed countries against the dollar. This has contributed to growth of foreign government bond quotes in dollar terms, which had a positive effect on the National Fund's performance. The approach to currency diversification implemented by the National Bank also proved its effectiveness, becoming a source of income for the National Fund.

– Gold is also in the spotlight this year. How has its value changed in portfolio of the fund?

– In the first half of the year, cost of gold updated its historical maximum, exceeding the mark of $3,400 per troy ounce. The price growth was driven by demand for safe haven assets amid ongoing geopolitical risks, as well as expectations of lower US rates and a weaker dollar. Moreover, we see an increase in gold purchases by central banks in developing countries seeking to increase the share of reserves in assets. Following the current market trend, the National Bank of the Republic of Kazakhstan has taken a leading position in the international arena in this indicator, increasing the share of gold in the gold and exchange assets to 62% at the end of the first half of this year. I also consider it is important to indicate that in February 2025, the National Bank suspended sale of gold from its gold and foreign exchange reserves amid a challenging geopolitical situation in the world. Subsequent introduction of tariffs by US President Donald Trump in April of this year increased volatility in financial markets, and further escalation of the military conflict in Middle East allowed the gold price to reach its historical highs. Thus, the gold continues to serve as an effective risk hedging instrument. At the end of the first half of the year, value of the National Fund's gold portfolio rose by $0.8 billion or 25.5%.

– And what about assets and corporate bonds of emerging market?

– Asset portfolio of the emerging market also boasted a growth of $600 million or 5.7%. This was facilitated by stabilization of commodity prices, recovery of the trading activity and inflow of capital amid improvement of the global risk appetite. Corporate bond portfolio also expanded by $400 million or 8.4% due to a decrease in credit spreads and expectations of rate cuts.

– In the first half of the year, the fund also provided large transfers to the budget. How did this affect volume of foreign currency assets?

– This is certainly an important factor that affects the overall dynamics. In the first half of the year, direct transfers to the national budget amounted to 3.12 trillion KZT. Along with that, receipts of the fund from the oil sector during the same period stood at 1.8 trillion KZT.  Throughout the entire period, in order to ensure transfers to the budget on the domestic foreign exchange market, foreign exchange assets in the amount of 4.95 billion dollars were gradually converted from dollars to KZT. Thus, despite ensuring budget transfers and implementing foreign exchange sales, growing volume of foreign exchange assets of the National Fund in the first half of 2025 was ensured mainly by significant investment income received through effective management of the National Fund's assets amid changing conditions in financial markets.

Source:

Kapital.kz