Our Comments and Expectations
External Background. U.S. indices fell by 2–2.55% yesterday. A negative factor once again was Donald Trump's attacks on Federal Reserve Chairman Jerome Powell, whom he called "Mr. Too Late," urging once again for rate cuts. Trump also stated that the Fed chair would be responsible for any economic slowdown. Among corporate news, Tesla's decline stands out after Wedbush analyst Dan Ives warned that the company, which reports on Tuesday, faces a "code red" situation — a crossroads for Musk between his political activities and business. Ives advised Tesla’s CEO to focus more on the automotive side. On the geopolitical front, Trump noted there are good chances of reaching an agreement this week. On Wednesday, a U.S. delegation is expected to meet with Ukrainian and European officials in London. Futures for European indices point to a decline: Stoxx 600 and DAX are losing 0.6% each. Martins Kazaks of the ECB stated that tariffs increase the risk of a recession in the eurozone. Asian markets are relatively calm this morning: the Hang Seng is up 0.8%, while the Nikkei 225 is down 0.2%.
According to Goldman Sachs, China's GDP growth is likely to slow sharply in the second quarter due to tariff impacts. Oil is trading moderately higher this morning, up 0.3% at $66.7 per barrel. Gold has almost reached the $3500 per ounce mark. S&P 500 futures are currently rising by 0.6%.
Bonds. The yield on 10-year U.S. Treasuries rose to 4.4%. Trump's threats to the Fed’s independence triggered an outflow from the Emerging Markets Bond ETF (EMB), which lost $12.5 billion in April — potentially the largest outflow since October 2023.
KASE Index. The KASE index is showing neutral dynamics. The growth rate has significantly slowed following the April 17th decline; however, quotes still have a chance to retest the 5600-point level.
Index Stocks. The biggest gainer yesterday was BCC shares — the stock finally broke through the April 2 and March 5 highs, reaching new all-time highs. It took eight consecutive sessions of slow growth for the stock to rise from local lows to peaks. Kazakhtelecom shares had been rising for six consecutive sessions but opened slightly lower today. We reviewed the company’s latest report, slightly raising the target price to 52,600 KZT but lowering our recommendation to "Hold."
It’s worth noting that the valuation largely reflects the cash proceeds from the sale of the subsidiary Mobile Telecom-Service, and further local price movements will mostly depend on the dividends to be approved at the upcoming AGM on May 15. Among international stocks, the 4.2% drop in Kaspi.kz ADSs is notable, pressured by a weak Nasdaq session. We also note an emerging correlation between Kazatomprom GDRs and the DXY dollar index.
Currency. It seems that the sharp global decline of the dollar is starting to show up on the USDKZT chart. The dollar has been falling against the tenge for the fourth session in a row, trading this morning at 517.3 KZT.