Our Comments and Expectations
External Background. Global markets showed moderate growth yesterday. The S&P 500 rose by 0.6%. Technology stocks increased after Intel provided an optimistic forecast for the current period amid growing demand for personal computers. The White House’s announcement that Donald Trump and Xi Jinping will meet next Thursday on the sidelines of the APEC summit was also perceived positively. Today, investors will closely watch the release of U.S. inflation data, which will be the first major government statistic following its operational pause. The U.S. Consumer Price Index (CPI) for September is likely to have remained at 0.4% compared to the previous month. In Asia, the Chinese market (CSI 300 +1.1%) and Hong Kong market (Hang Seng +0.6%) are rising this morning following news of the Trump-Xi meeting. Oil reached $66 per barrel yesterday and is trading at $65.6 today.
Bonds. U.S. 10-year Treasury yields began showing signs of a reversal after yesterday’s rise, returning to 4%.
KASE Index. KASE closed neutral yesterday, but even this result can be considered satisfactory as the index has stopped declining. In addition, oil and some stocks are signaling recovery.
Index Stocks. Air Astana shares rose 1.7% yesterday. While not the leaders in growth, this result is most interesting for us as prices broke the 840 KZT resistance level and reached 850 KZT. Previously, shares had unsuccessfully attempted this level three times and only succeeded on the fourth try. We had noted earlier that until the 840 KZT mark is surpassed, it is premature to talk about a broad recovery. Now it is time to do so — the technical breakout indicates buying power and growth prospects to local levels of 870 and 900 KZT, as well as our fundamental target of 960 KZT in the medium term. Additionally, Kazatomprom on the LSE started rising from the $50 support level and recovered roughly half of its losses. Prices encountered the resistance level corresponding to the lower boundary of the sideways channel at $52.8. With the rise in oil prices, KMG shares on the local market may also start to grow, having been in consolidation for some time. KEGC shares showed the largest decline yesterday. A small note here — we did not account for the October 27 holiday in our prior assumption of too early a drop in KEGOC shares before the registration date. Most likely, the shares will continue to decline in the current session. For declining BCC shares, we continue to observe emerging signals of growth and a possible breakout of the descending trend line. There is also a slight increase in investor interest as prices continue to fall.
Currency. The rise in oil prices had a moderate impact on USDKZT quotes — the tenge strengthened by 0.1% against the dollar yesterday and is now again attempting to test the resistance of the upward trend line on the dollar/tenge chart.