Our Comments and Expectations
External Background. On Friday, the S&P 500 index fell by 2%. The main pressure came from economic data: U.S. personal spending in February increased by 0.4% MoM, while incomes grew by 0.8% (vs. the expected 0.5%). The core PCE price index came in at 0.4% vs. the forecast of 0.3%. These figures reflected a decline in consumer sentiment in the U.S. and a surge in long-term inflation expectations, as tariffs continue to drive up prices. The VIX volatility index jumped 16% to 21.7 points. According to Bank of America, U.S. equity funds recorded their largest weekly outflow this year. This morning, Trump’s rhetoric is adding further pressure to the markets: the former president announced his plans to introduce reciprocal tariffs against "all countries", dismissing speculations about a possible tariff cap on April 2. He also threatened secondary sanctions on buyers of Russian oil if Moscow refuses to agree to a ceasefire. Goldman Sachs now expects the Fed and ECB to cut rates three times this year instead of two, as tariffs slow economic growth. European markets also declined, but to a lesser extent than the U.S.: the Stoxx 600 index fell below its 50-day moving average. Asian markets saw panic selling this morning, especially in Japan:
Nikkei 225 dropped by 4%
Topix declined by 3.4%
Kospi fell by 3%
Meanwhile, gold reached new all-time highs.
Bonds. The U.S. 10-year Treasury yield fell to 4.25%, as investors moved into safe-haven assets.
KASE Index. On Friday, the KASE index gained 0.7%, recovering some losses and strengthening within a local consolidation. This morning, it is rising another 0.5%, despite the weak external backdrop. To confirm a sustained breakout above resistance levels, the KASE index must close at least at its current level or higher.
Stocks. The key growth driver in the last session was Halyk Bank, following the release of a strong earnings report and dividend recommendations. We raised the target price to 365 KZT per share, with a 22% upside potential. We also revised our valuation for KazMunayGas, slightly lowering the target price to 17,500 KZT. The Q4 report was neutral on a quarterly basis, but the full-year 2024 results were moderately positive:
Revenue remained stagnant, but adjusted EBITDA and its margin improved slightly
Free cash flow saw significant growth
The biggest decliner was Kazatomprom, reflecting investor rotation during the previous session on the London Stock Exchange (LSE).
Currency. The USD/KZT exchange rate rose to 504.4, approaching its 50-day moving average. This comes as the DXY dollar index declined for the third consecutive session, while USDRUB remains unchanged, suggesting that the weakening of the tenge is a localized event.