Our comments and expectations
External backdrop. The S&P 500 rose by 2.5% yesterday — the move came without surprises, as prices increased almost exactly in line with early-morning futures. Other major global indices were also firmly in positive territory amid progress in peace negotiations between the U.S. and Pakistan. The CBOE Volatility Index (VIX) declined from 25.7 the previous day to 21.05. U.S. Vice President JD Vance is reportedly set to lead a delegation to Pakistan later this week to hold negotiations on a lasting peace agreement with Iran, according to the White House press service. Oil fell to $95 per barrel despite the fact that the strait effectively remained closed due to Israeli strikes on Lebanon. Analysts at Barclays stated that equities are exposed to a “powerful short squeeze,” as hedge funds unwind hedges that had been put in place to mitigate military risks. Goldman Sachs also noted that hedge funds are rushing to close positions against U.S. equities at a pace not seen since mid-2020. This morning the situation slightly deteriorated — futures on the S&P 500 declined by 0.2% after Iran stated that three clauses of the ceasefire proposal had been violated, including continued Israeli military actions against Hezbollah in Lebanon. Oil is trading around $97 per barrel for both Brent crude oil and West Texas Intermediate. Asian indices are showing moderate declines, futures on the DAX are down 0.4%, while the STOXX Europe 600 remains neutral.
KASE Index. The index closed virtually unchanged yesterday. The combined gains in Air Astana, Halyk Bank, Kaspi.kz and Kazatomprom were not enough to offset declines in KazMunayGas and KazTransOil shares.
Index stocks. At today’s open, index quotes are up 0.4% — KazMunayGas shares are no longer declining, while Kaspi.kz continues to gain and KazTransOil is recovering. Overall, the reaction to the positive external backdrop remains moderate, possibly due to relatively comparable prices between GDRs and local shares. For example, at yesterday’s close, Kazatomprom (KZAP) and Halyk Bank (HSBK) traded 0.6–0.9% higher on the local market than their GDRs, while Kaspi.kz traded 1.3% lower, which is being priced in during today’s session. From a technical perspective, progress was noticeable only in Air Astana ADS, which broke above an important downward trend line during the session but then pulled back, failing to provide investors with a clear signal of a trend reversal. GDRs of Halyk Bank and Kazatomprom remain in sideways consolidation.
Currency. USDKZT is rising for the third consecutive session today. The dollar has reached the 480 tenge level, where local consolidation is forming. Notably, USDKZT dynamics are moving opposite to USDRUB, where the ruble is strengthening against the dollar. As a result, the tenge is weakening against the ruble — to 6.12 yesterday and 6.15 today.