External Background: The U.S. market was closed yesterday in observance of Memorial Day. The London Stock Exchange also had a holiday due to a banking holiday. European continental indices, Stoxx 600 and DAX, showed an increase of 0.31-0.43% following statements from ECB representatives. François Villeroy de Galhau mentioned that the ECB should not rule out the possibility of lowering borrowing costs in both June and July. Geopolitical tensions in the Middle East have intensified following an airstrike by Israeli forces on a refugee camp in the border city of Rafah, which has drawn international condemnation. Additionally, an Egyptian soldier was killed in a clash with Israeli forces. This morning, S&P 500 futures are showing a rise of 0.14%. Among the anticipated events is the publication of the Beige Book tomorrow. On Thursday, initial jobless claims in the U.S., GDP, and wholesale inventories will be released. Asian markets are opening with neutral positions, showing no influence from U.S. indices. Reports indicate that banks in China approved loans for developers totaling more than 900 billion yuan (approximately $124 billion), but the actual amount turned out to be lower. Oil is trading at $82.9 this morning, and copper is rising after a notable decline last week.
Bonds: The yield on 10-year U.S. Treasury bonds is showing a slight decrease this morning, remaining close to its 50-day average.
KASE Index: KASE lost 0.2% yesterday. KazMunayGas continued to lead the decline; however, the dividend correction of these shares did not impact the index, which remains in a sideways trend for now.
Index Stocks: KMG dropped an additional 1.9%. We mentioned the potential overextension of the decline yesterday. Moreover, the report was moderately positive and could not serve as a catalyst for the drop. Despite a stable tenge, revenue, free cash flow, operating profit, and net profit are showing significantly greater increases. The EBITDA margin also slightly improved, leading to an increase in net profit, which was the second-highest in the last year and a half. Considering the level of free cash flow and the maintenance of dividends at the previous level, the likelihood of an increase next year becomes high if oil prices remain at least at current levels. We also evaluated KEGOC's results for the first quarter, where the company is showing another record increase in quarterly revenue following reforms in the energy sector and rising tariffs. The increase in government bond yields and rising WACC negatively impacted the valuation, resulting in the target price remaining at the previous level. However, recently, KEGOC has begun to emerge as a leading dividend stock, showing an 8.65% 12-month dividend yield.
Currency: The dollar closed yesterday on the forex market with a decrease around 441.5 tenge. Today, this value remains largely unchanged. On the KASE, the last transaction (at the time of writing this review) was at 441.6 tenge.
Key Market News
(=) KZTO: KazTransOil JSC reports financial results for the first three months of 2024.