Our Comments and Expectations
External Background. The S&P 500 closed neutral yesterday. Speaking before Congress, Jerome Powell reaffirmed that the Fed is in no rush to adjust interest rates. He emphasized that the regulator will remain patient before lowering borrowing costs further. Investors are now eagerly awaiting today's U.S. inflation report, which may include revisions for all of 2024. Forecasts suggest that the Consumer Price Index (CPI), excluding food and energy, increased by 0.3% in January. On an annual basis, core CPI is expected to have risen by 3.1%. Meanwhile, small business confidence in the U.S. declined last month from its highest level in over six years. In Asia, the Hong Kong Hang Seng index showed strong growth this morning. UBS strategists stated that the rally in Chinese stocks, driven by the artificial intelligence application DeepSeek, is less than halfway through. Japanese authorities have requested that Trump exclude Japanese companies from his tariffs on steel and aluminum. Oil prices rose to $77 per barrel. The EIA expects global oil surpluses to reach 1 million barrels per day by 2026 due to increased production by non-OPEC countries and the U.S.
Bonds. The yield on 10-year U.S. Treasuries rose to 4.54% yesterday. Emerging market bonds declined.
KASE Index. The KASE index declined yesterday and may continue falling in the coming sessions to a key support level in the range of 5480–5500 points, which aligns with December lows.
Stock Performance.
The decline in Air Astana shares continues. The stock lost support after breaking below the 750 tenge level and following the completion of its share buyback program. Other stocks showed moderate declines of around 1%. BCC failed to rebound for the third consecutive session, losing 0.8%. Halyk Bank fell by 0.85% but has not yet updated its 1.5-month highs. On Nasdaq, GDRs of Halyk Bank and Kaspi fell by more than 1%. From a technical perspective, Kaspi was hit the hardest, retreating downward from its 50-day moving average.
Currency.
The dollar continues to weaken against the tenge. This morning, USDKZT declined to 502 tenge, approaching the psychologically significant level of 500, which could act as support for the dollar. A comparative chart of USDKZT and DXY shows that the tenge has completely diverged from the dollar’s global movements due to internal factors, primarily the tax period. We believe that after this period ends, the correlation between the tenge and the dollar may begin to recover. Investors should consider buying the dollar after February 15. Seasonal analysis indicates that January and February are characterized by high stability, with the tenge strengthening in this period every year since 2017.
However, March has historically been a challenging month for the tenge, as "black swan" events have occurred during this time:
- 2020 – COVID-19 pandemic,
- 2022 – Start of the war between Russia and Ukraine.
Even without such crises, March has generally been a moderately negative month for the tenge. Mild depreciation of the national currency was observed in 2017, 2021, and 2023.