Our comments and expectations
External background. Yesterday, the S&P 500 rose by 0.4%. During the session, quotes fell to nearly 5,700 points and then climbed to 5,762. This movement was influenced by Jerome Powell, who spoke at the National Association for Business Economics forum. The chairman indicated that there is no rush to further reduce interest rates, but also stated that the central bank would lower rates "over time," emphasizing that the overall economy remains on a solid footing. Most likely, Powell's speech hints at a one-time rate cut of 0.5% rather than 1%, spread over the remaining meetings of the year. Other factors of moderate market pressure included strikes by workers at key U.S. ports and tensions in the Middle East. In Europe, quotes showed a significant decline due to the weakness of the automotive giants. Volkswagen AG issued its second profit warning in three months, and Jeep Stellantis NV downgraded its forecast. In Asia, Chinese markets, including Hong Kong, which saw significant growth yesterday, are closed today. The Japanese Nikkei 225 is recovering half of its losses after a 4.8% drop yesterday.
Bonds. The U.S. bond market fell after Powell's comments. The 10-year Treasury yield rose to 3.8%.
KASE Index. The local market was neutral yesterday but is down by 0.4% at the opening. Most stocks did not show notable activity, except for the traditionally stable KEGOC. Interesting news came from the currency market and the National Bank.
Index stocks. KEGOC jumped by 1% and is up another 0.5% today. Given the stock's stability, this is a notable spike in activity, possibly related to the recently announced half-year dividend recommendation. At the moment, quotes are attempting to break out of the stagnant sideways trend. BCC fell by 0.7%, and a local downtrend can be observed in the stock since September 3. Kaspi rose on Nasdaq, but this only strengthened its position in the local consolidation after the stock's decline. Kazatomprom remains in its sideways channel, while the correction in Air Astana GDRs signals a local decline to $6.4.
Currency. An interesting development today is the National Bank’s monthly statement on the currency market. The regulator plans to sell $1.3-1.4 billion from the National Fund in October, which can be seen as a continuation of accelerated sales. However, a record $850-950 million for the current program will also be purchased for the UAPF. It is worth noting that the foreign currency share of the fund has long exceeded the planned 30% and currently stands at 38.3%. If another $850-950 million is purchased, the share will rise to 40.6% (excluding volatility). Possibly, buying dollars for the UAPF acts as a tool for currency intervention to offset large sales volumes from the National Fund. However, UAPF only has about 9 billion tenge in cash, which makes further dollar purchases difficult if there are no large bond redemptions in the portfolio planned for October.