Our Comments and Expectations
External Background. The S&P 500 updated its record high, closing just slightly above the July 3 level. Trump introduced a 35% tariff on Canadian goods starting August 1 and plans to impose uniform tariffs of 15% or 20% on most trade partners. These announcements had little impact on the market, which JPMorgan Chase’s CEO confirmed, saying markets are largely indifferent to tariffs. Mary Daly from the Fed stated that two rate cuts this year are a “likely outcome.” Musalem added that it's too early to determine if tariffs will have a lasting impact on inflation. Meanwhile, Fed chair nominee Kevin Hassett criticized the central bank for “lagging behind” in rate cuts. In Europe, indices showed mixed dynamics: the Stoxx 600 rose for the fourth straight session, while the DAX pulled back from historical highs. In Asia, the Hong Kong stock exchange posted a solid morning gain, while Japanese and Korean indices declined slightly. Goldman Sachs raised its 12-month target for the MSCI Asia Pacific ex-Japan index, implying a 9% return in USD terms. Brent oil dropped below $69 a barrel yesterday. According to OPEC, global oil demand is expected to grow by about 19% and reach nearly 123 million barrels per day by 2050. Futures on the S&P 500 are currently down 0.3%, and European index futures are down 0.3–0.5%.
Bonds. The yield on U.S. 10-year Treasury bonds rose slightly yesterday to 4.35%.
KASE Index. The KASE index rose by 0.9% yesterday — the strongest performance in the current rally, which has now lasted nine consecutive sessions. Trading volumes hit their highest level since June 30.
Index Stocks. After reaching resistance levels, Kcell shares closed flat. Two key drivers of growth remain in the market — BCC and KMG shares. The incredible rally in CCBN stock continued yesterday: prices hit new highs, and trading volumes reached their highest since March last year. This triggered a boom in other banking sector stocks not included in the index — such as ForteBank. Since these stocks are not within our coverage, we cannot provide full analysis or forecasts, but based on multipliers, they currently appear overbought. Notably, the high price-to-book ratios are unusual for the banking sector.
KMG shares rose 2.1%, also hitting new highs. Prices are approaching our fundamental target of 17,900 tenge, so at this point, we lean toward a local “hold” recommendation. Kazatomprom GDRs rose nicely on the LSE, though we are not yet convinced they’ve broken out of local consolidation. We also note the weak reaction to falling uranium prices.
Currency. The USDKZT is trading at 520.8 this morning. This may once again indicate a potential upward rebound for the dollar and a breakout from local consolidation. Yesterday, the ruble showed increased volatility following news of tougher sanctions against Russia.