Our comments and expectations
External backdrop. The S&P 500 fell again by 0.4%, while the Fed, as expected, raised the rate by 0.25 pp for the first time since 2023. The median rate forecast for end-2026 rose to 4.1%, implying one more hike, and for end-2027 — from 3.6% to 4.1%. Thus, the Fed is counting on sustaining solid economic growth at higher rates. The yield on 10-year US Treasuries rose to 5.02%. European markets closed ahead of the Fed decision up 0.3–0.5% amid lower oil prices. Brent fell 2.7% to $105.8 per barrel: Saudi Arabia’s proposal to increase supplies via Oman somewhat eased concerns about a shortage. This morning oil is declining to $103.8 per barrel. In Asia, sentiment is moderately negative, though index declines do not exceed 0.6%. S&P 500 index futures are reacting positively, up 0.7%.
KASE Index. KASE fell 1.1% yesterday. The index’s correction within the current down leg that started on August 31 has already exceeded 4%. The main pressure came from overseas-traded Kaspi and Kazatomprom securities, which have lost 10–12% over this period. We see the main reasons as weakness in Western markets amid a sharp rise in yields and expectations of rate hikes, as well as the continued strengthening of the tenge. Now an important point: the index quotes have declined to an upward trend line that, on the logarithmic chart, originates from mid-2022. It may become strong support for the market from a long-term technical perspective. At the same time, it is important to watch that the index does not move lower, for example to the levels of the June–July sideways trend around 7,650 points. Statistics show that year-end is traditionally a strong period for KASE — since 2018, the average return in October has been +2.29%, with seven out of eight outcomes positive. October looks like a more stable but usually moderate month, while November is potentially stronger but less predictable.
Index stocks. Kaspi shares posted the biggest decline yesterday. The ADS on Nasdaq gave back the positive results of the Friday and Monday sessions, returning to test support at the 50-day moving average. This is an important local technical level, since the next support is seen only around $93.8, which is about 4% below current levels. Kazatomprom stopped falling yesterday, and as we noted earlier, after a prolonged correction the shares and GDRs have become more attractive in terms of upside potential to fair value, which is now about 21%. A similar situation is developing for Halyk Bank: the GDRs rose yesterday, and the upside to the target price is 17.4%. Air Astana shares also declined, which can be explained by rising oil prices. At the open of today’s session, we see most stocks rising, except for neutral dynamics in KZTK, KCEL and KMGZ.
Currency. USDKZT is declining for the fourth session in a row, including this morning’s move. At the moment, quotes are falling to 445.3 tenge. As we wrote earlier, we expect the pair to reach the level of 439 tenge, and this may happen much faster than our initial expectations if the current dynamics of the dollar/tenge pair persist.