Our Comments and Expectations
External Background.
The S&P 500 index fell 1.17% yesterday, closing at session lows. Shares of major technology companies, which had previously offset declines in other sectors, this time became a drag on the market themselves. Increasingly, analysts are voicing concerns about market overheating, while executives from Capital Group, Goldman Sachs Group, and Morgan Stanley describe the potential pullback as a healthy development. In Europe, indices posted smaller losses, but a notable feature was the sharp intraday reversal of the main benchmarks. In Asia, trading has been mixed this morning: Japanese and Korean indices are down, while markets in Hong Kong and mainland China remain relatively stable. Oil is trading flat — around $64.4 per barrel — and S&P 500 futures are down 0.2%.
Bonds.
The rise in 10-year U.S. Treasury yields has stalled, likely due to a shift away from risk assets. Corporate bonds remained neutral.
KASE Index.
As we expected, the KASE index failed to break through resistance levels to reach new all-time highs yesterday. In addition to technical barriers, the market was likely affected by negative external sentiment — corrections in both emerging markets and the U.S. The market also didn’t get much help from BCC, which could have significantly supported the index had the previous growth momentum been maintained.
Index Stocks.
The main pressure on the market yesterday came from three stocks — BCC, Halyk Bank, and Kazatomprom. CCBN shares fell after failing to reach a two-month high of 5,300 tenge. It’s important to note that these stocks are currently moving without any specific news triggers, making them more susceptible to general market fluctuations. The biggest losses were seen in Kazatomprom, which came under pressure from a global correction in uranium stocks. The sector ETFs URA and URNM dropped by 4% and 5.4%, respectively. However, Kazatomprom’s GDR price position still looks stronger compared to its peers in the U.S., Canada, and Australia. Among GDRs, Halyk Bank showed the steepest decline — likely a reaction to news about ALMEX’s possible secondary share offering on the market. Such a reaction is generally expected, as these placements usually occur at a discount to market prices. Nonetheless, this drop is not driven by fundamentals, and a subsequent recovery looks quite likely.
In the U.S. market, Kaspi ADS shares declined yesterday, while KASE quotes showed growth. Apparently, this created a discrepancy between the two exchanges, with the currency gap widening to 10% in favor of local shares. As of today’s market open, we see local shares correcting this divergence, falling by 5.4%.
Currency.
The U.S. dollar fell to 520.4 tenge yesterday but was later bought back to 524 tenge. Recall that in mid-summer, USDKZT established a sideways trend in the 517.5–520 range, which can be seen as a support level. Today, the dollar is trading at 524 tenge on the forex market.