For those bold enough to explore emerging markets and invest in small and mid-cap companies, current conditions offer significant growth opportunities. Market participants should consider a wide range of investment strategies, said Timur Turlov, founder and CEO of Freedom Holding Corp. (FRHC), a Nasdaq-listed, US-based company, as he shared his insights at the ITC IDEAS 2024 forum, part of Kazakhstan’s premier event, Astana Finance Days.
“We are entering an era where governments may increase pressure, particularly on industry leaders, and many economists still cite budget deficits as a key source of inflation,” Timur Turlov said.
As global financial markets become more complex and heavily influenced by macroeconomic factors, the tech giants that have long dominated the U.S. stock market — often referred to as the ‘magnificent seven’ (Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), Nvidia (NVDA), Meta Platforms (META), and Tesla (TSLA)) — may no longer have the same ability to generate trillions of dollars in net income for shareholders as they did in the past.
Timur Turlov suggests that it is now the right time for investors to broaden their horizons, diversify their portfolios, and consider high-yield bonds, emerging market bonds, and a mix of small and mid-cap stocks. Such opportunities, Timur Turlov argued, could potentially offer higher returns for shareholders compared to the established ‘magnificent seven.’
While Timur Turlov acknowledged that large corporations would continue to be attractive, he also pointed out that smaller companies could offer unique advantages, including less government regulation and lower tax burdens, which could benefit investors.
However, Timur Turlov also cautioned that investing in small-cap companies requires more careful consideration due to their inherent complexities. “Smaller companies are harder to navigate. Not all of them are well-managed, transparent, or effective in serving the interests of minority shareholders. But there are still many good opportunities among them,” he explained.
Timur Turlov also stressed the importance of incorporating environmental, social, and governance (ESG) principles when building investment portfolios. He believes sustainable development and maintaining harmonious relations with society and the state are critical to long-term business success.
Timur Turlov said that successful and fast-growing companies of all sizes must commit to corporate social responsibility and philanthropy, and Freedom Holding itself adheres to these principles. “Social responsibility is becoming a major global trend, especially as governments struggle to meet increasing social obligations. Being a reliable partner to the state and adhering to these principles means socially responsible businesses will be in great demand,” he stated.
Freedom Holding Corp. continues to develop its corporate social responsibility (CSR) program, and Turlov—a billionaire deeply committed to philanthropy—was recently appointed Chairman of the UN Global Compact Advisory Committee in Central Asia. The holding has supported initiatives in education, sports, and disaster relief in Kazakhstan, and Turlov views education as the cornerstone of national prosperity.
Freedom Holding Corp. currently provides financial services in 22 countries, including Kazakhstan, the U.S., Cyprus, Poland, Spain, Uzbekistan, and Azerbaijan. Kazakhstan remains the company’s key market, where it is developing a broad ecosystem that includes a bank, two brokerages, two insurance companies, and a lifestyle segment. According to Turlov, the growth of this ecosystem will inevitably lead to increased net profits.
Timur Turlov is also positioning the company for further expansion, not only in emerging markets but also in Europe and the U.S., believing that Freedom Holding’s success in Kazakhstan can be replicated in larger markets.
Freedom Holding Corp. posted record revenues of $1.6 billion for the 2024 fiscal year, a 105% increase from the previous year. Net profits reached $375 million, up 82%, while the holding’s assets grew by 63%, reaching $8.3 billion.
Photo: Valery Ayapov
