Our comments and expectations
External backdrop. The S&P 500 fell 1.2% yesterday, the Nasdaq dropped 2.6%, while the Dow Jones was virtually unchanged, pointing to sell-offs in the tech sector and a rotation by investors into more defensive industries. The trigger was Meta’s earnings: large-scale AI spending led to negative free cash flow, and plans to issue a new class of shares intensified questions about funding further investments. The company’s shares lost nearly 8%, and the SOX semiconductor index fell to more than 26% below its June peak. At the same time, demand for U.S. Treasuries surged: the 10-year yield dropped by 20 bps to about 4.95%, falling below 5% for the first time since September 23. Investors began to price in a less hawkish Fed rate path, wary of the consequences of a potential slowdown in the investment boom. At the same time, the latest labor-market data did not point to a sharp deterioration: initial jobless claims fell by 6k to 194k. Brent rose 4% to $113.2 after reports of a possible resumption of U.S. and Israeli strikes on Iran in November. In Europe, the Stoxx 600 and DAX lost about 1%. Eurozone consumer confidence fell to -17.9 points versus a forecast of -17, reaching the lowest level since May. Today, Asia started trading lower but then partially recouped losses: the Kospi trimmed its decline to about 0.6%, the Hang Seng moved into positive territory by 0.6%, and Nasdaq 100 futures returned to prior closing levels. Oil this morning reached $114.3, while gold fell to $4028, indicating higher demand for government bonds as a defensive instrument.
KASE Index. KASE fell 0.3% yesterday, still unable to move above the round 7,900-point level. The sell-off in our ADS and GDRs on Western exchanges suggests the correction may continue today.
Index stocks. BCC was the leader of the correction among local names, down 1.6% yesterday and another 0.5% today at the market open. The pullback may be a signal that in the coming sessions prices will shift into a brief sideways trend, after which it will be important to watch the boundaries of the local channel for either an upside breakout or a more substantial decline. The top gainer was Kazakhtelecom, which rose for the third session in a row following a spike in trading volumes on October 21. The main sell-off yesterday took place on Western venues. Kazatomprom fell 4.3%, but the technical picture did not change: prices continue to move along the descending trend line and, most likely, may reach the $58.5 level. Kaspi lost 3.2%; prices fell below the 100-day average but did not break the horizontal support around $90.6 and remain above the 200-day moving average. The People’s Bank GDRs show a broadly similar picture; moreover, at today’s LSE open the shares are trying to recover up to $33.2. Thus, yesterday’s decline in GDRs and ADS was painful, but overall did not lead to a serious deterioration in the technical picture. Of the three main names, Kazatomprom looks the weakest at the moment.
FX. The dollar is trading at 450.1 tenge today, i.e., without any material deviation. Today the National Bank cut the base rate by 0.5 pp, in line with our expectations.