The market overview has been prepared by analysts from the Association of Financiers of Kazakhstan (AFK).
Currency Market Following the pre-holiday trading on Thursday, the USD/KZT exchange rate closed at 485.13 tenge per dollar (-1.12 tenge). The trading volume slightly decreased to 264.9 million dollars compared to 313.4 million in the previous session. The external environment was neutral for the tenge, with simultaneous declines in oil quotes (-0.8%) and the US dollar index (-0.4%). Consequently, the strengthening of the national currency was largely driven by internal factors. The excess supply of foreign currency in the local market could be linked to the suspension of its purchases in the ENPF, demand from foreign investors for Kazakhstani government bonds, as well as the maintenance of high interest rates within the system.
Diagram 1. USD/KZT:
Source: KASE
Money Market Indicative money market rates at the end of Thursday showed weak mixed dynamics: TONIA increased by 2 b.p. to 13.81%, while SWAP-1D decreased by 13 b.p. to 8.53%. Meanwhile, the trading volume rose to 802.3 billion tenge (+44.8 billion) against its average daily values since the beginning of the year at 734.0 billion. At the same time, the withdrawal of short-term liquidity from the market continues through deposit auctions (1.5 trillion tenge on Thursday), resulting in the open net position of the NBK being maintained near the mark of 7.1 trillion tenge.
Stock Market The KASE index barely changed during the last trading session of the week, settling at 5,213.96 points (-0.09%). In the absence of significant corporate events, six out of ten companies in the representative list showed moderate declines (from -0.2% to -0.6%). However, this was almost entirely offset by an increase in the value of equity instruments of BCK (+1.2%), which may have been driven by expectations of strong financial results from the bank for the first nine months of 2024 (16.11). This week, local investors' focus is on the bond offering of "Kazakhtelecom" (31.10) and the operational reports of KMG and "Kazatomprom" (01.11).
Oil Oil prices remained volatile under the influence of events in the Middle East. By the end of Friday, the price of Brent oil rose by 2.3% to 76.1 dollars per barrel, amid news of an Israeli strike in southern Lebanon that resulted in the deaths of three journalists. Prices were also supported by hopes for new stimulus from Chinese authorities: from November 4 to 8, the National Congress will convene, where measures for economic recovery may be announced. Meanwhile, on Sunday, oil prices lost all gains, falling by 4.5% to 72.6 dollars per barrel, as the widely anticipated Israeli retaliation against Iran did not hit Tehran's oil and nuclear infrastructure. Consequently, the premium for geopolitical risk began to decrease, as energy resource supplies were not disrupted, and Iran's restrained response to the strike raises hopes for de-escalation of the Middle Eastern conflict.
Risk Assets The rally on American stock markets continued at the end of last week. Strong results from Tesla reignited expectations for positive financial outcomes from the "Magnificent Seven" companies, which will be published this week (Alphabet, Meta, Apple, Amazon). Overall, this week will be the busiest of the third-quarter earnings season, with more than 150 companies from the S&P 500 set to release their results. Regarding macroeconomic indicators, they also came out quite positive: the operational PMI data from S&P Global showed an increase in business activity in the US in October, while jobless claims unexpectedly decreased the previous week (by 15 thousand, to 227 thousand). The consumer confidence index from the University of Michigan rose to April highs at 70.5 points, while inflation expectations for Americans over the next year remained at 2.7%. It is worth noting that in the next two weeks, the stock market is likely to remain vulnerable to any short-term events, including the US presidential elections, the results of the Federal Reserve meeting, corporate earnings reports, and more.
Defensive Assets At the end of last week, there was increased demand for the dollar, as global investors are betting on rising volatility ahead of the US presidential elections and decisions on interest rates from three central banks: Japan, the United States, and the United Kingdom. The yield on 10-year US Treasury bonds also recovered after a decline on Thursday, from 4.24% to 4.20%, amid expectations of less aggressive rate cuts by the Federal Reserve due to the ongoing strength of the US economy. Conversely, gold prices showed a different trend, as the key safe-haven asset momentarily lost its appeal following a decrease in tensions in the Middle East: -0.2% by the end of Sunday.