AFC Investor Sees Ideal Time for Investment in Uzbekistan
AFC Uzbekistan Fund chief Scott Osheroff told Idea Brunch why macro reforms, easing inflation, and new liquidity make Uzbekistan attractive.
Scott Osheroff, the chief investment officer for the AFC Uzbekistan Fund, shared his views on why current conditions are ripe for investment in Uzbekistan during an interview with Idea Brunch, published on August 16, 2026.
Osheroff recounted his initial visit to Uzbekistan in May 2018, roughly a year and a half after the passing of former President Islam Karimov. He expressed surprise at the initial lack of interest from foreign investors in a nation boasting a population of 34 million (now 39 million) and a formal economy valued at US$80 billion (now US$145 billion), underpinned by substantial reserves of gold, copper, and uranium. During that period, the local real estate market was delivering 25 percent returns, while companies in the equity market experienced triple-digit annual growth rates, coupled with price-to-earnings ratios below one and dividend yields nearing 50 percent.
A pivotal moment arrived in early March 2019 with the removal of foreign exchange restrictions. At this time, the fund became the first foreign institutional investor to successfully repatriate proceeds from share sales on the Tashkent Stock Exchange back to Hong Kong. The AFC Uzbekistan Fund was subsequently launched later that same month.
Regarding his current optimistic outlook on the Uzbek market, Osheroff pointed to the cooling of inflation, which has fallen from 15.2 percent in 2018 to 6.4 percent in July 2026. He also noted the stabilization of the national currency, which transitioned from double-digit annual devaluation in 2018 to an appreciation of approximately 7 percent in 2025. This favorable environment has encouraged public savings to flow into the banking sector and, subsequently, into the corporate bond market. Here, companies are now raising US$20 million or more at high double-digit coupon yields, a significant improvement from previous rates of 30 percent.
Osheroff indicated that the Central Bank of Uzbekistan might reduce its key policy rate from the current 14 percent to around 13 percent before the year's end, assuming no geopolitical disruptions, thereby lowering the cost of capital. He also identified the initial public offering of the Uzbekistan National Investment Fund (UZNF), managed by Franklin Templeton, as a significant market driver. This followed its dual listing on the London and Tashkent exchanges in May 2026, attracting interest from major global institutions, including JPMorgan. JPMorgan plans to incorporate Uzbekistan's soum-denominated sovereign bonds into its GBI-EM emerging market index starting September 30, 2026.
Access to local brokerage services has seen substantial improvement. While opening an account was previously hampered by infrastructure challenges, foreign retail investors can now open accounts online in about five minutes, with custodial services provided by Bank of Georgia, OTP, and Raiffeisen.
Discussing his investment approach, Osheroff mentioned that his residency in Uzbekistan for over five years, coupled with conducting site visits to portfolio companies and meeting management in person, has facilitated major off-market transactions with state entities and private firms. He underscored the importance of comprehending specific economic reforms, citing the elimination of oilseed subsidies—which rendered approximately 20 listed vegetable oil processors unprofitable—and the restructuring of the state-owned company Uzbekneftegaz with assistance from the Asian Development Bank, which impacted service providers and structural steel manufacturers.
Osheroff highlighted the Uzbek Commodity Exchange as an example of robust corporate governance, operational transparency, and consistently high dividend yields. He further added that the local financial market regulator has increasingly enforced protections for minority shareholders, which has benefited the fund's operations.