Our comments and expectations
External backdrop. The S&P 500 added 0.2% on Friday, continuing its recovery after the Fed meeting. Semiconductor manufacturers provided support, but gains remained uneven: the Nasdaq rose 0.4%, while the Dow Jones fell 0.2%. The yield on 10-year U.S. Treasuries again reached 5%. The market was pricing in about a 55% probability of another Fed rate hike in October. Brent slipped 0.7% to $103.4 per barrel. Reports that China, at Saudi Arabia’s request, urged Iran to restrain Houthi attacks on Saudi oil infrastructure helped ease tensions. In Europe, the situation was noticeably worse: the Stoxx 600 lost 1.1%, the DAX 1.6%, and the FTSE 100 1.5%. Selling was broad-based, with the auto and telecom sectors falling the most. Additional negativity came from a deterioration in Volkswagen’s outlook; its shares dropped 5.6%. In London, banks came under significant pressure, losing 2.1%. Investors continued to factor in the risks of high rates: after the Bank of England meeting, Barclays joined JPMorgan in expecting a rate hike in November. Over the weekend, geopolitical tensions increased again. The Houthis reported missile and drone strikes on targets in Riyadh; fire and smoke were observed near the airport. On Sunday, Saudi Arabia’s index fell 0.3% and Qatar’s 1.1%. Thus, diplomatic efforts have not yet stopped further escalation.
KASE Index. KASE was virtually unchanged on Friday, down 0.04%. After the recovery a day earlier, the market had a calm session: changes in most stocks did not exceed 0.3%. The exception was KazTransOil, which retreated 1.3%. During the day, the index dipped below 7850 points, but finished trading slightly above this level.
Index stocks. The main moves occurred on foreign venues. Kazatomprom GDRs on the LSE fell 5.4% to $64.7, while local shares added 0.3%. The decline in the receipts took place amid selling in Europe, but was significantly stronger than index moves. At the same time, uranium fell only 0.2% to $89.75 per pound. At the exchange rate, the GDR price corresponds to about 28.9 thousand tenge per share versus 30.8 thousand tenge on KASE—a gap of about 6.2%. Halyk Bank GDRs lost 2.7% amid weakness in the UK banking sector, while local shares were almost unchanged. Air Astana receipts fell 1.3%, and shares on KASE declined 0.2%. Kaspi’s dynamics were more restrained: ADS on Nasdaq added 0.1% to $97.53, while local shares fell 0.2%. The discount of the U.S. receipts to KASE shares remained around 2.3%. KazTransOil partially gave back Thursday’s gain, falling to 1232.5 tenge. Solidcore on AIX retreated 1.8% to $12.76, despite a 0.6% increase in gold.
Currency. USDKZT on Friday slightly rebounded from the 445.7 tenge level, where there is support at a Fibonacci level. The dollar index DXY was virtually unchanged and remained around 100.2 points.