Our comments and expectations
External backdrop
The S&P 500 posted a neutral session, declining by 0.3%. This result was significantly better than that of European and Asian markets, which recorded more pronounced losses. During yesterday’s session, oil prices climbed to $119 before pulling back to $108, which somewhat calmed the markets. An additional positive effect came from Netanyahu’s statement that Iran is no longer capable of enriching uranium or producing ballistic missiles. He also added that the war would end much sooner than expected. Today markets are awaiting the expiration of options totaling $5.7 trillion. A wave of selling swept across European markets following reports that the ECB may be ready to raise rates as early as April if the consequences of the war in Iran push inflation significantly above the target level. Oil is currently trading below $108, which is lower than the closing levels of the past two sessions. It has been reported that the United States allowed the sale of part of Russia’s oil, while Scott Bessent stated that sanctions on certain Iranian supplies may be lifted. On the other hand, Saudi Arabia forecasts that oil prices could rise above $180 if war-related transportation disruptions persist through the end of April.
KASE Index
For KASE, yesterday’s session was marked by declines in Kazatomprom and Air Astana shares, while KazMunayGas posted gains. The overall result for the index was −0.6%, although during the session quotations climbed to a record 8,039 points. Today the market opened with a slight decline of about 0.15%.
Index constituents
Starting with the underperformer — Kazatomprom shares fell by 8.3%, while its GDRs declined by 3.2%. The situation on the LSE was challenging, explaining the deeper decline of the GDRs compared with uranium funds URA and URNM. Technically, the picture appeared fragile: during the session quotations broke below the support level around $72.8 but still closed very close to it. To maintain recovery potential, it is important that prices do not continue declining today and do not settle below support levels. KazMunayGas shares rose another 4.8% yesterday on elevated volumes. At today’s open, KMG is down 1.2%, while KazTransOil is dropping by 3.5%. Air Astana shares are up 1% today; our view regarding the exit of BAE Systems was already discussed in the previous review.
Currency
The dollar has been consolidating around 480 tenge for the third consecutive session. Today the ruble is strengthening against the dollar to 84.5. The key factor behind the recent decline in USDRUB is a significant shortage of foreign-currency liquidity caused by the absence of FX sales by the Russian Ministry of Finance in the open market due to changes in the fiscal rule. We believe that the strengthening of the tenge against the ruble may pause in the near term. This assumption is primarily based on expectations that exporters, after some delay, will start selling Urals oil at more favorable prices, increasing revenues and their liquidity on the Moscow Exchange. Over the next three months we expect USDRUB to form within the range of 83–90 rubles, while USDKZT may return to 495–505 tenge. This implies RUBKZT trading within the range of 5.6–5.9 tenge.