9th December 2010 Academy of RFCA and UBS AG jointly hosted the third conferencein Almaty, Kazakhstan - Global Investment Outlook 2011: The new world order. The objective of the conference was to provide the audience with the unique opportunity to proactively exchange their views with high profile financial experts from UBS, National Bank of Kazakhstan, RFCA Academy, government officials of Kazakhstan and the business community.

The international and local event attendees consisted of approximately 150 top management and shareholders of major Kazakh financial institutions, businesses and senior representatives ofstate organizations.

Chairman of the Agency of the Republic of Kazakhstan on regulation of activities of the regional financial centre of Almaty City, Arken Arystanov, opened the conference with a welcome address together with Hendrik Geldenhuys, Managing Director, UBS AG. UBS and RFCA have established a partnership to launch the RFCA Academy and this conference further supports that initiative.

Chairman of National Bank of Kazakhstan Grigory Marchenko and UBS global strategist Paul Donovan were key speakers at the conference. Panel discussionsconcentrated on global and local macroeconomics and markets. The following delegates participated at the panel discussion:

UBS:
• David Buckle, Executive Director, Senior Portfolio Manager, UBS Global Asset Management, London
• Paul Donovan, Managing Director, Global Economics, UBS Investment Bank, London
• Maxim Moshkov, Executive Director, Senior Analyst, Oil & Gas, UBS Investment Bank, Moscow

Kazakhstan:
• Kuat Akizhanov, Director, State Borrowing Department, Ministry of Finance of the Republic of Kazakhstan
• Arken Arystanov, Chairman, Agency of the Republic of Kazakhstan on regulation of activities of the Regional Financial Centre of Almaty City
• Grigory Marchenko, Governor, National Bank of Kazakhstan
• Madi Umbetaliyev, Advisor to the Chairman, JSC Sovereign Wealth Fund "Samruk-Kazyna"

Paul Donovan suggested that:
1. The economic recovery continues, and the global economy will not slip into a second recession. However, global growth is likely to come in at around trend in 2011 (UBS forecasts global growth of 3.7% compared to a trend rate of around 3.5%). This means that the spare capacity that built up during the 2008-2009 recession is not being removed from the global economy. Labour cost inflation pressures in the OECD are therefore likely to stay modest.
2. OECD economies will continue to operate in a low inflation environment. As such, it is unlikely that central banks will move to tighten monetary policy quickly. Liquidity provision will continue throughout the first half of the year.
3. The main concern for financial markets is more likely to be political risk and event risk than economic risk. As such, events in the Euro area, concerns about trade protectionism, financial regulation, capital controls and fiscal policy will all occupy investors' attention. With periodic risk
aversion we would look for modest dollar strength against the Euro and the yen, with some slight weakness against Asian currencies.
4. Commodity prices are likely to be supported by the composition of growth (with a bias to domestic growth in the Asian region leading to reasonably strong commodity demand. However, in an environment where the dollar still has safe haven status, and where growth is around trend not strongly above trend, it is unlikely that commodity prices will exhibit considerable strength.

Presenting his forecasts, the Governor of the National Bank of Kazakhstan Grigory Marchenko made the following comments on macroeconomic situation and monetary policy of Kazakhstan:
1. The Kazakhstan forecast is generally in line with UBS estimates in terms of main trends. After falling to just around 1% in 2008-2009, Kazakhstan GDP growth fully recovered in 2010 and is expected to reach 5-6% in 2011. GDP per capita is also growing and is expected to reach USD 8,000 in 2011.
2. By November 2010 the country’s aggregate international reserves reached USD 58.0 bn, of which the reserves of the National Bank of Kazakhstan (including gold and currency reserves) totaled USD 27.8 bn, and national assets totaled USD 30.2 bn, both figures considerably above 2009 levels.
3. The currency band introduced in 2009 and expanded in 2010 proved to be a useful instrument –the stability of the tenge was apparent during the last 12 months. "If the current market situation remains unchanged, there is no reason to expect devaluation of the tenge in 2011. At the same time, we are not going to let the tenge appreciate sharply either,"said Grigory Marchenko. So, the situation in 2011 most probably will not change considerably as compared to 2010, unless any dramatic changes in external markets take place.
4. Speaking about the situation in the banking sector and the monetary policy, it should be noted that the sector received serious support during the crisis. The National Bank of Kazakhstan supported its liquidity through money market transactions. The most important event in the financial sector was successful restructuring of external debt of three banks. According to Grigory Marchenko, the successful completion of the restructuring solved the external debt problem of the banking sector as a whole, and all the three banks remained operative.

At present the main task of the state is to stimulate banks to attract deposits more actively, especially in the retail segment.

In 2011 the banking sector of Kazakhstan will need to improve the credit market situation and to solve the problem of distressed assets.

Grigory Marchenko also commented on the structure of lending. According to him, the structure of lending in Kazakhstan is changing in favor of corporate lending so far. In terms of currency structure, the volume of local currency loans is growing, while the volume of foreign currency loans is decreasing. Retail deposits in all currencies are growing with local currency deposits outperforming – their share in total deposits increased from 44.1% in December 2009 to 54.1% in October 2010. Monetary policy of the National Bank of Kazakhstan is still aimed at ensuring price stability. The bank does not plan any significant policy changes, and, consequently, its policy measures will supporteconomic growth and development of the deposit market potential, as well as recovery of lending activity.

Reports by main speakers were followed by panel discussion with Maxim Moshkov, Executive Director, Senior Analyst, Oil & Gas, UBS Investment Bank, Moscow, Kuat Akizhanov, Director of State Borrowing Department of the of the Ministry of Finance of the Republic of Kazakhstan, Arken Arystanov, Chairman of the Agency of the Republic of Kazakhstan on regulation of activities of the Regional Financial Centre of Almaty City, as well as representatives of Kazakhstan banks, financial and investment companies and large businesses.

The participants discussed global economic outlook for 2011, as forward-looking estimates depend first of all on the 20 largest world economies that determine the global economic situation. Discussed topics also included the future performance of oil prices, monitoring and assessment of macroeconomic processes in the context of strategic development goals set by the Republic of Kazakhstan, as well as the issues of monetary, fiscal, investment and foreign economic policies of Kazakhstan and other countries.

Notes to Editors

About UBS

UBS draws on its 150-year heritage to serve private, institutional and corporate clients worldwide, as well as retail clients in Switzerland. We combine our wealth management, investment banking and asset management businesses with our Swiss operations to deliver superior financial solutions and manage CHF 2.2 trillion in invested assets. Headquartered in Zurich and Basel, Switzerland, UBS has offices in more than 50 countries, including all major financial centers, and employs approximately64,000 people. Under Swiss company law, UBS is organized as an Aktiengesellschaft, a corporation that has issued shares of common stock to investors. UBS AG is the parent company of the UBS Group (Group). The operational structure of the Group comprises the Corporate Center and four business divisions: Wealth Management & Swiss Bank, Wealth Management Americas, Global Asset Management and the Investment Bank.

About Paul Donovan

Paul Donovan joined the UBS in 1992 and is a Managing Director and Global Economist. Paul is responsible for formulating and presenting the UBS Investment Research global economic view, drawing on the bank’s world-wide resources. He co-authors theGlobal Economic Perspectives publication with the other members of the Global Economics team and writes Global Economic Specials that focus on key topics of interests to investors. Paul regularly appears on the CNN, Bloomberg TV, and CNBC television stations.

Paul took a degree, and was a scholar, in Philosophy, Politics and Economics at Oxford University. He is a senior member and Honorary Fellow of St Anne’s College, Oxford. He holds an MSc in Financial Economics from the University of London. He is a co-founder of the Peter Culverhouse Memorial Trust, a charitable fund that raises money for cancer research and patient care, and an economic adviser to the East London Business Alliance.

About RFCA Academy

A decision to create the Academy of the RegionalFinancial Centre of Almaty City (RFCA Academy) was taken within the framework of the RFCA Development Program up to 2010, approved by order of the Chairman of the RK Agency for Regulation of Activities of the Regional Financial Centre of Almaty City (Order No. 68 of December 8, 2006).

Today the RFCA Academy development is focused on the near-term and strategic challenges faced by the market –it is developing as a training center for specialists and managers who need to take well grounded financial decisions.

In Kazakhstan, the RFCA Academy is the first and the only public business school with focus on finance and management which has both a license of the Ministry of Education and Science and professional accreditation with the Ministry of Finance of the Republic of Kazakhstan.

It is important, because:

• the quality of education is controlled by governmental agencies through a system of indicators which are closely monitored;
• the key multi-level programs on financial markets and management received all necessary international accreditations and state licenses or successfully passed industry and academic assessments.

The educational process of the RFCA Academy has an international component. International partners of the Academy are experts, practitioners and consultants who have deep knowledge of the latest innovations and instruments employed in management and finance. One of such key partners of the Academy is UBS.