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02 Nov 2021

5 мин

How to Start Investing: 7 First Steps in the Uzbekistan Stock Market

What You Need to Know Before You Start Investing in Stocks and Bonds in Uzbekistan. Read seven tips for beginner investors from Aziz Abdusalomov, a financial expert at Alpari.

Where to start investing in securities? What opportunities are there in Uzbekistan's stock market? Aziz Abdusalomov, a financial expert from the international financial brand Alpari, answers these questions especially for Kapital.uz.

The most common questions from beginner investors sound like this:

Is there a universal investment that will consistently generate stable income?
How can you build a financial strategy to outperform other investors in terms of returns?

Is there a universal investment that will consistently generate stable income?
How can you build a financial strategy to outperform other investors in terms of returns?

Is there a universal investment that will consistently generate stable income?
How can you build a financial strategy to outperform other investors in terms of returns?

Unfortunately, these are not entirely correct questions. Investing in a single company or a single asset class is always an inherently risky and short-sighted approach.

No financial expert can accurately predict market volatility or asset returns for a period longer than two to three years, because macroeconomic and political events that also affect the global economy are unpredictable. For example, the pandemic in early 2020 caused a sudden crash in global financial markets overnight.

Make a decision on asset allocation between classes: stocks and bonds. This allocation is individual for everyone, depending on the investment horizon, financial goals, and financial capabilities. The main principle is: the longer the investment period, the higher the percentage you can afford to invest in stocks.

The Uzbek stock market makes sense to consider based on the EqRe Blue stock index, which consists of eight stocks with higher liquidity and market capitalization, provided that the companies have reported positive net profits over the past four quarters.

No financial expert can accurately predict market volatility or asset returns for a period longer than two to three years, because macroeconomic and political events that also affect the global economy are unpredictable. For example, the pandemic in early 2020 caused a sudden crash in global financial markets overnight.

That’s why the first and perhaps most important rule of successful investing is: “Don’t put all your eggs in one basket.” In other words, diversify your portfolio — don’t bet everything on a single asset or just a few of them.

The more diversified your investment portfolio is, the greater the chances of it being profitable.
Here’s what I recommend to beginner investors who are considering Uzbekistan’s capital market:

Make a decision on asset allocation between classes: stocks and bonds. This allocation is individual for everyone, depending on the investment horizon, financial goals, and financial capabilities. The main principle is: the longer the investment period, the higher the percentage you can afford to invest in stocks.

The more diversified your investment portfolio is, the greater the chances of it being profitable.
Here’s what I recommend to beginner investors who are considering Uzbekistan’s capital market:

Make a decision on asset allocation between classes: stocks and bonds. This allocation is individual for everyone, depending on the investment horizon, financial goals, and financial capabilities. The main principle is: the longer the investment period, the higher the percentage you can afford to invest in stocks.

Asset diversification

The most liquid stocks

The Uzbek stock market makes sense to consider based on the EqRe Blue stock index, which consists of eight stocks with higher liquidity and market capitalization, provided that the companies have reported positive net profits over the past four quarters.

The bond market in Uzbekistan is still underdeveloped, so it makes sense to buy all available bond issues with different maturities and from various issuers.

The bond market

Rebalancing the investment portfolio

Over time, the proportions of your portfolio will change due to price fluctuations. To improve investment results, it is recommended to rebalance your portfolio once or twice a year, or in case the markets drop by more than 30%.

An investment portfolio needs to be replenished with new funds. Investing is not a magic wand or a holy grail, but merely a way to accumulate capital through financial instruments. Investing is an ongoing process, not a one-time event or object. Therefore, from the perspective of expenses and taxes, it is more beneficial to buy additional discounted assets to bring your portfolio back to its original proportions.

Portfolio replenishment

Choosing a broker

Anyone who wants to buy stocks and bonds on the national stock market must choose a broker, as only a broker can provide access to the trading system through which buy and sell orders for securities can be submitted. A broker is a legal entity and a professional participant in the stock market, holding the necessary licenses from the market regulator. All brokers charge the same commission fee per transaction — 1% for stocks.

Portfolio rebalancing involves selling assets that have grown significantly and buying those that have dropped substantially. This way, the main investment rule is followed: "Buy low, sell high."

To sum up, I must say that the Uzbek stock market is currently less attractive compared to global financial markets. Nevertheless, I remain optimistic and confident that the key driver for growth could be the increase in financial literacy among the population. In the future, this will strengthen trust in local securities, their quality, and liquidity. Over time, more and more Uzbek companies will want to go public and list on the exchange, thereby enhancing our country’s reputation on the world stage.

The trading system fondbozori.uz is the only trading platform of the national stock market where stocks and bonds are available for purchase.

Trading system

Asset diversification

The most liquid stocks

The Uzbek stock market makes sense to consider based on the EqRe Blue stock index, which consists of eight stocks with higher liquidity and market capitalization, provided that the companies have reported positive net profits over the past four quarters.

The bond market in Uzbekistan is still underdeveloped, so it makes sense to buy all available bond issues with different maturities and from various issuers.

The bond market

Rebalancing the investment portfolio

Over time, the proportions of your portfolio will change due to price fluctuations. To improve investment results, it is recommended to rebalance your portfolio once or twice a year, or in case the markets drop by more than 30%.

An investment portfolio needs to be replenished with new funds. Investing is not a magic wand or a holy grail, but merely a way to accumulate capital through financial instruments. Investing is an ongoing process, not a one-time event or object. Therefore, from the perspective of expenses and taxes, it is more beneficial to buy additional discounted assets to bring your portfolio back to its original proportions.

Portfolio replenishment

Choosing a broker

Anyone who wants to buy stocks and bonds on the national stock market must choose a broker, as only a broker can provide access to the trading system through which buy and sell orders for securities can be submitted. A broker is a legal entity and a professional participant in the stock market, holding the necessary licenses from the market regulator. All brokers charge the same commission fee per transaction — 1% for stocks.

Portfolio rebalancing involves selling assets that have grown significantly and buying those that have dropped substantially. This way, the main investment rule is followed: "Buy low, sell high."

To sum up, I must say that the Uzbek stock market is currently less attractive compared to global financial markets. Nevertheless, I remain optimistic and confident that the key driver for growth could be the increase in financial literacy among the population. In the future, this will strengthen trust in local securities, their quality, and liquidity. Over time, more and more Uzbek companies will want to go public and list on the exchange, thereby enhancing our country’s reputation on the world stage.

The trading system fondbozori.uz is the only trading platform of the national stock market where stocks and bonds are available for purchase.

Trading system

Asset diversification

The most liquid stocks

The bond market

The bond market in Uzbekistan is still underdeveloped, so it makes sense to buy all available bond issues with different maturities and from various issuers.

Over time, the proportions of your portfolio will change due to price fluctuations. To improve investment results, it is recommended to rebalance your portfolio once or twice a year, or in case the markets drop by more than 30%.

Portfolio rebalancing involves selling assets that have grown significantly and buying those that have dropped substantially. This way, the main investment rule is followed: "Buy low, sell high."

Rebalancing the investment portfolio

Trading system

To sum up, I must say that the Uzbek stock market is currently less attractive compared to global financial markets. Nevertheless, I remain optimistic and confident that the key driver for growth could be the increase in financial literacy among the population. In the future, this will strengthen trust in local securities, their quality, and liquidity. Over time, more and more Uzbek companies will want to go public and list on the exchange, thereby enhancing our country’s reputation on the world stage.

The trading system fondbozori.uz is the only trading platform of the national stock market where stocks and bonds are available for purchase.

Portfolio replenishment

An investment portfolio needs to be replenished with new funds. Investing is not a magic wand or a holy grail, but merely a way to accumulate capital through financial instruments. Investing is an ongoing process, not a one-time event or object. Therefore, from the perspective of expenses and taxes, it is more beneficial to buy additional discounted assets to bring your portfolio back to its original proportions.

Anyone who wants to buy stocks and bonds on the national stock market must choose a broker, as only a broker can provide access to the trading system through which buy and sell orders for securities can be submitted. A broker is a legal entity and a professional participant in the stock market, holding the necessary licenses from the market regulator. All brokers charge the same commission fee per transaction — 1% for stocks.

Choosing a broker

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