Our Comments and Expectations
External Background. The S&P 500 jumped 2.13% on Friday, rebounding from a seven-month low. A key positive driver was Senate Democratic leader Chuck Schumer’s decision to drop the threat of blocking a major spending bill. A Bloomberg survey showed that market participants expect the Fed to keep rates at current levels for most of the year before implementing two cuts starting in September. Michael Hartnett of BofA believes the current movement is just a correction rather than the start of a new bear market. Even inflation expectations, which have hit a 32-year high amid tariff wars, failed to dampen positive market sentiment: one-year inflation expectations in March rose to 4.9%, the highest since November 2022, while the five-year inflation forecast climbed from 3.5% to 3.9%, marking the sharpest jump since 1993. In Europe, leading indices posted more modest gains, but the technical outlook appears stronger than in the U.S. Germany’s inflation was revised to 2.6% for February, a positive signal for ECB policymakers. In Asia, major indices are up 0.9–1.7% this morning. A conference of Chinese policymakers to support the consumer sector is scheduled for today. Oil is trading around $71 per barrel.
Bonds. The yield on 10-year U.S. Treasury bonds stands at 4.31%. According to a Bloomberg survey, investors are more optimistic about Treasuries than stocks for the first time in at least three years. In Europe, German bond yields have risen again.
KASE Index. The KASE index rose 0.4% on Friday and added another 0.4% this morning, fully recovering losses incurred on March 11. The leader in growth was Air Astana, which announced a dividend recommendation.
Index Stocks. AIRA shares surged 6.3% on Friday after the Board of Directors proposed a dividend payout of 17.7 tenge per common share and 70.9 tenge per GDR. Additionally, special dividends of 36 tenge per share and 143.9 tenge per GDR were recommended. The announcement did not specify a record date, but the AGM must be held by May 31, and if approved, the payment is expected in mid-2025. The company also reported a moderately positive performance for 2024: Air Astana’s quarterly total revenue reached 157 billion tenge, up 23% year-on-year. FlyArystan drove most of the growth, increasing revenue by 23% y/y in Q4, while Air Astana’s revenue rose by 13% y/y. Net earnings per share for 2024 came in at 73 tenge. Additionally, we raised the target price for KEGOC shares to 1,840 tenge following the release of a neutral Q4 2024 report.
Currency. On Friday, the dollar rose to 507 KZT but closed below that level. This morning, the USDKZT rate is again falling below 500 and currently stands at 499.4.