Our comments and expectations
External background. The US trading session ended with a slight drawdown for the S&P 500. However, if you look at the intraday price chart, you can see how the quotes of all three major US indices began to decline synchronously in the last hour of trading. One of the triggers for this decline is the rebalancing of the portfolios of US pension funds after a significant market rally. According to a recent Morgan Stanley estimate, if stocks outperform, pension funds will have to sell about $22 billion worth of global stocks and buy $17 billion worth of bonds to return to their previous asset allocation levels. The index itself can close the 5th month of continuous growth, which is the first such achievement since 2013. In addition, there was a collapse of a large bridge in Baltimore, which led to logistical problems in the city, but it happened deep into the night and could hardly affect the markets. Among the expected macro reports this week, consumer sentiment from the University of Michigan USA on Thursday and the deflator PCE - personal income and expenses of Americans on Friday stand out. On the same day, the US market will be closed due to Good Friday. Meanwhile, in Europe, the Stoxx 600 is holding steady and maintaining an uptrend. In Asian markets, Hong Kong's Hang Seng is moderately declining and Japan's Nikkei 225 is rising amid a decline in the yen against the dollar. Oil is trading just below the $85 mark.
Bonds. Corporate bonds remained neutral yesterday, when the 10-year yield showed a slight decrease.
The KASE index. KASE grew by 0.5% yesterday. The quotes have not closed at new highs and are still testing the local resistance level. Nevertheless, there are still chances for continued local growth.
Index shares. Yesterday, the main growth leader in the market was Kaspi shares, which also rose on the NYSE. Air Astana added 1.2%. We initiated analytical coverage of securities with a buy recommendation and a target price of 1,600 tenge, which gives about 50% of the potential for growth. We also updated the target prices for Kazmunaigas shares after yesterday's conference call, raising them to 14,800 tenge after the 2023 report. Despite the overall decrease in net profit against the background of falling oil prices in 2023 after an abnormal 2022, cash generation turned out to be at a good level. The company managed to increase its annual EBITDA, as well as not significantly reduce its free cash flow due to the increased dividends received from joint ventures in the 4th quarter. Now KMG can pay record dividends of at least 620 tenge per share. Halyk Bank also showed an increase in revenue, but at the same time an increase in expenses, which led to a decrease in quarterly net profit. Nevertheless, 2023 turned out to be a successful year, and the company managed to justify its own forecasts. In 2024, management expects net profit to increase by another 15% and loan portfolio by 15-18%.
Currency. So far, the picture of USDKZT quotes has not changed much and they remain between the 50-day moving average and the local downward trend line.
Key market news
(=) KSPI: Kaspi.kz delisted its GDRs from the LSE