The market overview has been prepared by analysts from the Association of Financial Experts of Kazakhstan (AFK).
Currency Market At the opening of the currency trading on KASE this week, the demand and supply for foreign currency were balanced, which resulted in the average weighted exchange rate of USD/KZT remaining almost at the same level as last Friday's trading – at 498.68 tenge per dollar (+0.09 tenge). It is noteworthy that the significant deterioration in the commodity market and the ongoing depreciation of the Russian ruble may have had a limited impact on market sentiment due to the low sensitivity of the currency market (due to the stable supply of foreign currency from the National Fund in connection with operations to secure transfers to the budget and the sale of foreign currency earnings by KGS entities, as well as the end of the tax period).
Diagram 1. USD/KZT:
Source: KASE
Money Market The indicative rates of the money market opened the week with mixed movements: TONIA decreased from 13.78% to 13.71%, while SWAP increased from 8.60% to 8.88%. At the same time, trading activity significantly increased – the trading volume reached 656.3 billion tenge (+242 billion). Meanwhile, the National Bank withdrew 1.3 trillion tenge of short-term liquidity from the market (100% of demand) through a deposit auction with an annual yield of 14.25%. The open position of the NBK sharply decreased to 6.9 trillion tenge (tax period).
Stock Market The KASE index slightly increased at the end of Monday's trading, settling at 5,430.1 points (+0.4%). The main drivers of growth were the shares of BCK (+2.2%), as well as Kazakhtelecom (+1.3%) and KMG (+1.2%). It is worth noting that KMG previously reported its operational results (production increased by 3.1%, transportation by 6.4%), which may have stimulated purchases of the oil and gas company's shares, while the growth of other securities could have occurred due to the ongoing improvement in local risk appetite.
Oil Brent oil prices showed a sharp decline on Monday, dropping to $72.6 per barrel (-2.9%). The main factor behind this movement could be media reports about a potential ceasefire between Israel and Lebanon (which may be concluded today). Additionally, the news of Scott Bessent, a proponent of increasing shale oil production, being appointed as head of the Treasury in the future White House administration could have put pressure on quotes. In such conditions, OPEC+ may once again have to postpone increasing crude production, with the cartel's ministerial meeting taking place online this upcoming Sunday.
Risk Assets The news of investor and Key Square Group founder Scott Bessent's appointment as head of the U.S. Treasury was certainly well-received by the market – key U.S. stock indices rose by 0.3-1.0% on Monday. Investors see Scott Bessent as a person who may soften some of Donald Trump’s most extreme protectionist measures and will strive to support the stock market. Nevertheless, the future U.S. president announced on Monday intentions to impose tariffs of 25% on all goods from Mexico and Canada and 10% on all goods from China immediately after inauguration due to illegal immigration and drug smuggling. This could serve as a reason for profit-taking in today’s trading, especially considering the strong market growth following Donald Trump’s reelection.
Safe-Haven Assets On news of de-escalation in the Middle East, gold prices fell by 4.1% on Monday, but the yields on 10-year government bonds (from 4.41% to 4.27%) and the dollar index (from 107 to 106.8 points) slightly decreased on news of Scott Bessent's appointment as head of the Treasury (which may help mitigate the new administration's protectionist measures).