Our Comments and Expectations
External Background. The S&P 500 closed neutrally on Friday. Among the three major U.S. indices, only Nasdaq rose (+0.4%), driven by a 2.6% increase in Nvidia shares. The session was marked by positive government bond dynamics and a decrease in their yields. Retail sales in the U.S. dropped in January by the most in nearly two years, indicating a sharp reduction in consumer spending following a surge in the last months of 2023. Retail purchases, excluding inflation, decreased by 0.9% (compared to 0.7% in December), with a market consensus expecting a 0.2% decline. After this report, the swap market returned to fully pricing in the first rate cut by the Fed in September. In Europe, leading indices showed slight declines of around 0.4%. The Eurozone economy managed to show growth at the end of last year: Eurostat revised its initial estimate, reporting GDP growth of 0.1% in the fourth quarter. In Asia, a small decline in leading indices is observed this morning, except for the Korean index. China's net foreign direct investment fell by $168 billion in 2023, marking the largest capital outflow since 1990. Commodities dropped on Friday despite the decline in the U.S. dollar index. Oil is trading below $75 this morning. The U.S. intends to force Iran to reduce its oil exports to 100,000 barrels per day, according to Treasury Secretary Scott Bessen.
Bonds. The yield on 10-year U.S. Treasury bonds fell below the 50-day moving average.
KASE Index. The KASE index had a fairly good session, rising by 0.5%. The main positive development is that the downward trendline of the last wave of decline, which started on January 24, was broken. This gives direct signals for the local market’s recovery. Notably, when comparing the KASE index and the USDKZT exchange rate, a direct correlation is observed — as the tenge strengthens, the index decreases. At least, this is clearly visible when comparing charts from May of last year.
Index Stocks. Kaspi showed the biggest growth on Friday. On Nasdaq, ADS shares did not show growth, which may indicate they met the first resistance line. Additionally, both on the local market and at the LSE, Air Astana’s stock prices rose. KazTransOil gained 1.4%, but this did not significantly change the overall picture. From a technical perspective, the stocks remain quite close to the lows of the prolonged sideways trend. Today, the market opening was moderately negative due to a 1.4% decrease in Kcell’s shares. An interesting news item to note is Maria Khadzhieva’s announcement about the IPO of KTZ, QazaqGaz, and Samruk-Energy in 2025, which we believe seems like a challenging task.
Currency. In Kazakhstan, the tax payment period has started, which, in our view, may weaken the support for the national currency, as the actual conversion of foreign currency revenues into tenge was likely done last week. One additional factor could be the 2% weakening of the ruble on Friday. Moreover, the dollar may strengthen due to the formation of an ascending divergence on the 4-hour USDKZT chart.