The market overview was prepared by analysts from the Association of Financiers of Kazakhstan (AFK).
Currency Market On the Kazakh currency market on Wednesday, demand for foreign currency increased amid the ongoing correction in oil prices and a significant drop in the ruble. As a result of Wednesday's trading, the exchange rate for the USD/KZT pair rose to 500.42 tenge per dollar (+1.84 tenge). An unusually high trading activity was observed, with a total trading volume of 455.4 million dollars (+252.3 million). The purchases of foreign currency could have been driven by worsening expectations regarding the exchange rate and impulsive actions based on emotions, as well as the need to service external debt and seasonal increases in goods imports. It is worth noting that this quarter, payments on external debt could amount to 10.2 billion dollars, compared to 8.7 billion in the third quarter (+17%).
Meanwhile, the last transaction rate for the USD/KZT pair reached 502.7 tenge per dollar, which may indicate the market's short-term expectations for this pair. The significant depreciation of the exchange rate (by 10.1% since the beginning of the year) removes the possibility of resuming the cycle of lowering the base rate at tomorrow's meeting of the National Bank of Kazakhstan (NBK).
Diagram 1. USD/KZT Rate:
Source: KASE
Money Market The situation in the money market remains stable despite the volatility in the currency market: indicative rates showed slight mixed changes (TONIA increased from 13.69% to 13.71%, SWAP_1D decreased from 8.76% to 8.61%) amid a sustained structural liquidity surplus in the system. It should be noted that the open position on NBK operations sharply decreased to 6.0 trillion tenge (tax payments), but overall remains at relatively high levels.
Stock Market On Wednesday, the KASE index remained virtually unchanged, holding at 5,470.9 points (-0.04%). A moderate increase in Kcell shares (+1.5%) and Kaspi (+1.4%) was offset by declines in the shares of BCK (-2.4%) and the People's Bank (-1.6%). It is possible that a traditional end-of-month portfolio rebalancing was taking place.
Oil Brent oil prices on Wednesday remained at the low mark of 72.3 dollars per barrel, and currently are dropping to 72.2 dollars per barrel (-0.2%). The market is concerned about an intensification of price competition among oil-producing countries in light of the expected 25% increase in oil delivery tariffs to the US from Mexico and Canada. Additionally, crude oil inventories in the US unexpectedly rose by 3.3 million barrels, while a decrease of 0.1 million barrels was anticipated. It is noteworthy that due to the overall decline in oil prices, OPEC+ may postpone plans to increase production to avoid a surplus of crude oil in the market, with a decision possibly being announced this Sunday.
Risk Assets Inflationary statistics in the US led to a pause in purchases in the market for certain risk assets. For instance, key US stock indices closed Wednesday's trading session with declines ranging from 0.3% to 0.6%. It is worth mentioning that the core personal consumption expenditures (PCE) index in the US accelerated by 0.3% in October, the number of Americans filing for unemployment benefits for the first time decreased to 213,000 (-2,000), and the GDP growth estimate for the third quarter remained at 2.8% on an annualized basis. This data was sufficient for investors to begin locking in profits ahead of today's Thanksgiving holiday in the US.
We should also highlight the significant drop in the ruble in recent days (the USD/RUB rate rose on Wednesday to 108.01 from 105.06 the previous day) against the backdrop of the ongoing correction in oil prices, tightening sanctions, and worsening geopolitical risks following Russia's launch of a medium-range ballistic missile at the Ukrainian city of Dnipro. To curb further depreciation of the national currency, the Bank of Russia announced that it will not purchase foreign currency under the budget rule until the end of the year.
Safe-Haven Assets In risk-free instruments, the main changes on Wednesday were observed in gold (+1.0%), the prices of which recovered after a prolonged decline and correction of the dollar index (-0.9%).