Our Comments and Expectations
External Background. The S&P 500 closed neutral yesterday. Powell gave no signals of an imminent rate cut, only noting improved economic forecasts for the upcoming year. The rate remained unchanged, as expected. After market close, three mega-cap companies reported: Tesla shares rose 1.9%, Meta jumped 6.6%, and Microsoft shares fell 6%. European indices declined: Stoxx 600 lost 0.75%, failing to reach its highs. The metals rally continued — gold surged 4.3% yesterday (and another 4.7% this morning), uranium rose 8% and is now nearly $100 per pound. Brent crude rose to $68.4 per barrel. Prices were pushed higher by Trump, who warned Iran about the need to finalize a nuclear deal with the U.S., or else face military strikes “far more serious than last June.”
KASE Index. On Wednesday, the KASE index jumped 4% in a single session, a rare event for the relatively stable local market, marking the largest daily increase since March 9, 2022. Prices closed at session highs, and trading volume rose significantly to KZT 2.6 billion, half of which was in Народный банк shares.
Index Stocks. Until now, the main market drivers were metal-related stocks — Kazatomprom’s uranium and Solidcore’s gold. Now Народный банк shares have joined the strong rally. We recommended local purchases after signals of recovery at $28.2 for GDRs and KZT 363 on KASE. At the same time, we assumed strong resistance levels at $30 and KZT 380 would hold prices for a while, but the breakout was rapid and confident. No specific news triggers were observed, and the explosive interest in these stocks at this moment raises some questions, even though we repeatedly called HSBK the best portfolio stock in the market. GDRs rose 6% but closed well below session highs, which can be interpreted as a mixed signal. Kazatomprom rose 11.8% during the session, with its GDRs adding another 4.1%. It is worth noting that even with such rapid growth, local KASE stocks are still slightly cheaper than their foreign counterparts. The largest gap is for Народный банк — 2.5% at yesterday’s close. For most of the observed period, local stocks remain more expensive, which is a positive factor in this case. Interestingly, Kaspi ADS also joined the growth and, with the increased attractiveness of Kazakh assets, has a chance to retest the $84 level. Solidcore “took” its 2.7% growth amid a 4.3% gold surge and reaching $5,300 per ounce.
Currency. An interesting picture is seen on the USDKZT chart — the dollar rose to KZT 504.6 yesterday and seems to be attempting a rebound, which is logical overall, given that the triangle is the current pattern for the currency pair. However, there is very little time left for further dollar growth before the first effects of the February tax period kick in.