Market overview prepared by analysts from the Association of Financial Professionals of Kazakhstan (AFK).
Currency Market The national currency started the current week with a moderate decline, closing at 523.36 tenge per dollar (-0.59 tenge) by the end of Monday's trading. Meanwhile, trading volumes began to gradually decrease to 223.4 million dollars (-53.9 million), which is typical for the end of the year. Given the contradictory external environment (a drop in oil prices and a rise in the US dollar while the Russian ruble strengthens), this dynamic is likely more influenced by internal factors. The high base rate "cools" demand for foreign currency from businesses and the public, while its supply, due to the mandatory sale of 50% of export revenue in KGS and the conversion of transfers from the National Fund, fully meets the local market's demand.
Diagram 1. USD/KZT:
Source: KASE
Money Market Indicative rates in the money market opened the week with weak mixed movements: TONIA increased by 1 basis point to 14.92%, while SWAP decreased by 34 basis points to 10.06%. At the same time, trading activity continued to grow – trading volume reached 759.2 billion tenge (+50.1 billion). However, the National Bank's deposit auction on Monday saw reduced demand: the regulator withdrew 317 billion tenge of short-term liquidity from the market (100% of demand) with an annual yield of 15.25%. The open position of the NBKR remains at 7.5 trillion tenge of net debt to the market.
Stock Market The KASE index slightly decreased by the end of Monday's trading, settling at 5,502.98 points (-0.2%) with a 7.9-fold decrease in trading volume for shares compared to Friday's session. Seven out of ten companies in the representative list closed in the "red zone." Considering the absence of significant corporate news, local investors were likely taking profits, wrapping up the year. It is worth noting that this year, blue-chip stocks demonstrated significant growth, with the leaders being shares of BCK (2.2 times), Kcell (+75%), and the People's Bank (+49%).
Oil Brent crude prices moderately decreased on Monday, falling to 72.6 dollars per barrel (-0.4%). Trading activity was subdued ahead of the Christmas holidays. Oil traders may have been assessing the statements from U.S. President-elect Donald Trump, suggesting that the EU should increase imports of American oil and gas or face blocking tariffs. As for forecasts for next year, they remain bleak: Macquarie analysts expect average oil prices to be 70.5 dollars per barrel in 2025, compared to average values of 79.6 dollars this year. Meanwhile, support for prices might have come from reports of the resumption of operations of the Druzhba pipeline, which delivers Russian and Kazakh oil to Europe. It should be noted that operations were halted last Thursday due to technical issues at the Russian pumping station.
Risk Assets Major U.S. stock indices rose on Monday by 0.2-1.0% amid global investor demand for shares of the "Magnificent Seven," including Meta, Nvidia, Tesla, and Google. It is important to note that stock indices typically show strong gains in the last days of the year ("Santa Claus Rally") due to pre-holiday bullish investor sentiment.
Meanwhile, macroeconomic statistics in the U.S. were unexpectedly weak: the Conference Board's consumer confidence index fell to 104.7 points in December, against expectations of an increase to 113.3 points due to concerns about future business conditions. At the same time, orders for durable goods fell by 1.1% in November after a 0.8% rise in October.
Defensive Assets Defensive assets showed weak volatility on Monday. The yield on treasury bonds (+6 basis points) and the dollar (+0.2%) increased as investors prepare for a slowdown in monetary policy easing in the U.S. in 2025. Against this backdrop and due to the reduced pre-holiday activity of market participants, the price of gold decreased by 0.6%.