Kazakhstan's bonds land on J.P. Morgan index watch as Astana courts quality capital

Kazakhstan's government bonds have been placed on J.P. Morgan's Index Watch – Positive list, putting the country in line for possible inclusion in the bank's GBI-EM emerging-market government bond index, the Finance Ministry said on Oct. 8, according to The Astana Times.

The listing came out of J.P. Morgan's 2026 index classification review. According to the ministry, a 12-month assessment will now test how easily international investors can reach the market, including through international clearing and settlement systems, and how liquid the eligible bonds are. The ministry said inclusion could widen Kazakhstan's base of foreign investors, improve liquidity and reduce the government's borrowing costs.

From volume to value

The index news follows a shift in how Astana talks about foreign money. "We are essentially moving from the 'investor–project' model to the 'economic need–project–investor' model," Deputy Foreign Minister Ardak Zebeshev said, according to an Oct. 7 Astana Times report citing Kazinform. "Several years ago, the main indicator was the volume of foreign direct investment received during the year." He described the goal as steering capital into industries able to build new production capacity, with processing, exports and local supply chains as priorities. "The next stage does not imply abandoning quantitative targets, but requires a more comprehensive assessment of results," he said.

Zebeshev put Kazakhstan's accumulated foreign investment at $156.4 billion at the end of 2025, about 70% of Central Asia's total and about 51% of GDP. The country drew $9.4 billion in the first half of 2026, led by trade at $2.2 billion, finance and insurance at $1.9 billion and manufacturing at $1.8 billion. Recent manufacturing deals include Carlsberg's $344 million plant in Almaty.

A sober assessment from Washington

The U.S. State Department's 2026 Investment Climate Statement, reported by The Astana Times on Oct. 5, credits Kazakhstan with progress but flags regulatory uncertainty, localization policies and rule-of-law concerns. "Foreign firms cite the need for better rule of law, more predictable and transparent tax and regulatory systems," the report says. It puts Kazakhstan's FDI stock at $170 billion as of Jan. 1, with $35.5 billion from the U.S., and says U.S. investment in hydrocarbons, the sector behind the country's record oil exports, may be larger than official data show because of routing through third countries and reinvested earnings that are not captured.

The report also points to the Tax Code enacted in January 2026, which raised standard VAT from 12% to 16%, set corporate tax rates of up to 25% for banks and reduced rates of 5% and 10% for agriculture and health care, and drew concern from business. It notes that the National Fund held $73.8 billion on Jan. 1, 2026, about 24% of GDP, with roughly 45% of its assets in U.S. securities at the end of 2025. Kazakhstan is also preparing a Stock Market Development Program through 2030 and a new securities bill; 322 companies are listed on the Kazakhstan Stock Exchange.

Investor sentiment looks similarly mixed. A Montfort Eurasia survey of 273 investors, 137 in the UK and 136 in the U.S., reported by The Astana Times on Oct. 8, found 67.1% of UK and 65.5% of U.S. respondents with strong or moderate interest in Central Asia. Self-rated knowledge stood at 6.63 and 6.79 out of 10, and the report said it "has plateaued." Only 2.9% of U.S. respondents named Kazakhstan the region's most business-friendly market, down from 8.5%, against 10.9% in the UK. Investment security was the top worry, cited by 72.3% of UK and 64.7% of U.S. investors.

The headline numbers differ because they measure different things: the ministry's $156.4 billion is accumulated investment at the end of 2025, the State Department's $170 billion is FDI stock on Jan. 1, and Montfort's figure of about $440 billion counts FDI over 2005-2025.

What it means: A place in a major bond benchmark would bring a different kind of investor to Kazakhstan: index-tracking funds that buy local debt for its weight in a benchmark, not for a single project. That makes the next 12 months a test of market plumbing, from settlement access to bond liquidity. The State Department report and the Montfort survey suggest the harder obstacles sit elsewhere, in tax predictability, regulation and investment security. Zebeshev's value-first model and the index bid point the same way, toward capital that stays longer, but both depend on the rules staying stable.