Our Comments and Expectations
External background. The S&P 500 showed a slight increase of 0.2% yesterday. Bitcoin rebounded and reached its highest level since November 17. Bloomberg reports that Federal Reserve officials are unusually divided on how far they should continue cutting rates after easing by more than one percentage point. In Europe, indices posted similar modest gains. Inflation in the eurozone increased slightly to 2.2%, confirming the ECB’s view that rates are at appropriate levels. Core inflation remained at 2.4%. The Kremlin stated that Vladimir Putin held “very useful” talks with U.S. envoys Steve Witkoff and Jared Kushner, although the parties failed to reach an agreement on a plan to end the war waged by Russia. In Asia, Hong Kong’s Hang Seng is down 1.4% this morning, while other major indices are showing solid growth. S&P 500 futures are up 0.2%. The OECD stated that the global economy is coping with Donald Trump’s tariffs better than expected. Oil is once again trading below $63 per barrel.
Bonds. The yield on 10-year U.S. Treasuries was unchanged yesterday. Corporate bonds in emerging markets posted solid gains.
KASE Index. KASE continues to consolidate locally after the recent short four-session growth wave. The leaders of growth were the stocks that had declined in the previous session.
Index stocks. BCC rose 1.3%, halting its decline right at the support level of 4,548 tenge — also the lowest point of the last three months. Kcell gained 1.8%, recovering its positions. Trading on the LSE was moderately positive: Kazatomprom GDRs rose 1.6% and are testing a downward-sloping trend line. If this level is breached, the prices may move higher; however, a restraining factor could be the neutral third-quarter report, after which we downgraded the recommendation from “Buy” to “Hold.” The company still has no sales of enriched uranium compared to 2024. However, margins improved significantly after resolving the sulfuric acid issues. As a result, free cash flow increased by 16% y/y, raising the probability of higher dividends. KazTransOil shares have shown four consecutive sessions of growth, although today’s open shows a slight decline.
Currency. The tenge’s rally against the dollar continues today. USDKZT is falling to 503, while the RSI shows 16 points — a level comparable to the sharp decline of March 6, 2023. Back then, the dollar made a strong reversal immediately after reaching this point. Key drivers of the tenge’s strengthening include large FX sales by the National Bank and increased interest from non-residents attracted by high-yield government bonds. Risks that could work against the tenge include reverse interventions or a deliberate reduction in dollar sales by the National Bank, as well as unexpected events affecting oil exports — for example, accidents at crude-loading terminals in Novorossiysk.