Baku Stock Exchange head says IPOs, foreign partnerships will drive growth

Azerbaijan's Baku Stock Exchange (BSE) is counting on an upcoming bank IPO and a digital partnership with Abu Dhabi to help drive rapid growth and attract foreign capital, its chief executive Ruslan Khalilov told Reuters in an interview.

 Equity market capitalisation is currently equivalent to just 3% of the gross domestic product of oil-producing Azerbaijan, but Khalilov said this was set to rise to 5% by mid-2027 and 10% by 2030.
  

 Khalilov said the exchange is shifting away from a model dominated by repo transactions toward developing a broader equities and bond market, supported by initial public offerings and digital integration with international trading platforms.
   

 Total turnover on the BSE declined to 64 billion manat ($37.5 billion) in 2025 from 71 billion manat ($41.7 billion) a year earlier, reflecting the unbundling of the repo segment. 
   

 However, core market segments expanded: turnover in government securities rose 58.1%, while activity in the domestic corporate market increased by 5.26%.
   

 "The objective is not simply to expand repo volumes, which largely reflect banking sector liquidity and Ministry of Finance operations. We are focused on strengthening the foundations — equities and government securities," Khalilov said.
  

 A key growth driver will be the planned IPO of PASHA Bank, one of the country’s largest systemically important lenders. Khalilov said the listing could increase overall market capitalisation by 25% to 30%.
    

The bank has announced plans to float 5% of its shares in the spring, aiming primarily at retail investors.
    

"The presence of PASHA Bank alongside the International Bank of Azerbaijan (ABB) would create a dual engine for liquidity. When investors can choose between multiple blue-chip securities, investment becomes strategic rather than symbolic," Khalilov said.
    

Starting this month, the exchange will begin full integration with the Tabadul digital hub established by the Abu Dhabi Securities Exchange (ADX), providing reciprocal market access for brokers and enhancing connectivity between Azerbaijan, the United Arab Emirates, Kazakhstan and other participating markets.
    

Khalilov also described the BSE’s accession to full membership of the World Federation of Exchanges (WFE) as an important step toward strengthening transparency and aligning with international standards.
    

The BSE intends to launch full digital trading on the secondary bond market by late 2026. In the first half of 2027, it plans to migrate repo transactions from the over-the-counter (OTC) market to an electronic trading platform and integrate exchange systems into mobile banking applications.

 "Our goal is to enable retail investors to purchase a stock or bond with a single click," Khalilov said.

 Secondary equity trading was among the fastest-growing segments in 2025, rising 70%. The market currently includes around 16,000 equities and 7,000 bonds.
 

 "By 2030, Azerbaijan’s capital market could become a fully integrated and transparent pillar of the national economy, reducing reliance on a narrow set of financial instruments," Khalilov said.

Nailia Bagirova