Our comments and expectations
External backdrop. U.S. indices ended Friday higher: the Dow gained 0.9%, while the S&P 500 and Nasdaq rose 0.5%. The market was supported by a drop in oil prices on hopes for a U.S.-Iran truce. The sides are discussing a phased deal under which Tehran would open the Strait of Hormuz and Washington would lift the blockade. Brent fell more than 3% to $102 per barrel. Prices were additionally pressured by talk of a possible U.S. ban on diesel exports. At the same time, Houthi attacks on Saudi Arabia are keeping a risk premium in place, and Brent was almost unchanged for the week. The yield on 10-year Treasuries rose during the day to 5.18%, the highest since the financial crisis, but the market ignored it. For the week, the S&P 500 added 1.2%, the Nasdaq rose 3.3%, and the Dow snapped a three-week losing streak. In Europe, the Stoxx 600 rose 0.4% and posted its first weekly gain in a month, while Germany’s DAX added 0.6%. The Trump-Xi summit has concluded, and its key outcome was an extension of the trade truce until January 10. This morning sentiment is deteriorating: Tehran said it will not soften its terms, and Brent is up about 2%, while U.S. index futures are down 0.4-0.7%. In Asia, performance is mixed: Korea’s Kospi is down more than 2% after a two-day holiday, the Shanghai Composite is losing about 1.7%, the Nikkei is trading around flat, and the Hang Seng is up 0.7%.
KASE Index. KASE closed Friday unchanged, holding near local trendline support after a weak Thursday. This time, the index was supported by Air Astana and KEGOC shares, which offset a sharp decline in KazTransOil.
Index constituents. The main move in Kazakh names took place on international exchanges. The strongest gain was posted by Kaspi.kz ADSs on Nasdaq – up 3.1%. The stock bounced off local trendline and horizontal levels. A gradual rise toward $100 is likely. On KASE, the increase may be less pronounced since prices between the exchanges have now converged. Meanwhile, Halyk Bank shares are now lagging the GDRs on the LSE, which rose 1% on Friday. Kazatomprom and uranium stocks have not yet shown a rebound from rising trendlines, but we still consider this scenario likely. KazTransOil shares are down for the second day in a row, this time by 1.6% as of Friday’s close. The 1300 tenge level was broken, but the stock failed to hold above it; this time it is worth watching the dynamics over the next couple of days. Quotes are now near a local rising trendline, where a rebound can be expected. Air Astana shares rose 0.6%, noticeably lagging the GDR in London (+1.3%). The discount to the GDR widened from 1.2% to about 2%. Overall, the shares are slowly declining toward the 650 tenge level, and it is not yet clear what could drive a sharp reversal. We note the return of Solidcore shares to historical highs at $13 on AIX.
Currency. USDKZT rose 0.2% on Friday to 442.9, posting the first up day in a week. Despite the end of another tax week, we continue to expect the pair to decline to 439- 440 tenge.