The market overview has been prepared by analysts from the Association of Financial Experts of Kazakhstan (AFK).
Currency Market The exchange rate for the USD/KZT pair continued to decline on Thursday, settling at 524.9 tenge per dollar (-2.24 tenge). At the same time, trading activity saw a slight increase – the trading volume amounted to 235.7 million dollars (+44.1 million). Factors such as rising oil prices, an improvement in Kazakhstan's trade balance, significant conversion volumes of transfers from the National Fund, and statements from the National Bank about its readiness to conduct currency interventions in case of unjustified weakening of the tenge may have provided some support to the national currency's rate.
Diagram 1. USD/KZT Exchange Rate:
Source: KASE
Money Market Money market rates showed a noticeable increase on Thursday: the average overnight repo rate rose to 14.68% per annum (+37 b.p.), while the one-day currency swap rates "jumped" to 11.26% per annum (+148 b.p.). However, trading activity slightly decreased: the trading volume amounted to 717.9 billion tenge compared to 820.7 billion tenge the previous day. The demand for deposit placements in the NBK remains quite high – yesterday's withdrawal of short-term liquidity amounted to 2.0 trillion tenge. The open position on NBK operations is maintained at around ~7.4 trillion tenge in net debt to the market.
Stock Market Thursday's trading day on the Kazakhstan stock market ended with a slight increase: the KASE index rose to 5,728.29 points (+0.3%). The main drivers were shares of BCK (+2.3%), Kazakhtelecom (+1.9%), and KMG (+1.1%), while the decline in the prices of Air Astana shares (-1.1%) and Kcell (-1.0%) limited the potential for further index growth. Among the events in the debt market, the placement of the KFU's one-year bonds worth 1.5 billion tenge with a yield to maturity of 14.94% per annum can be noted.
Oil Brent oil prices on Thursday fully recovered from the decline in the previous session (-1.2%), settling at 77.2 dollars per barrel (+1.4%). It is likely that oil traders were assessing the possible impact of the cold weather in the US and Europe on commodity prices. In addition to the fact that a drop in temperature could lead to increased fuel consumption, extreme weather conditions could disrupt oil supplies. According to calculations by JPMorgan, a one-degree Fahrenheit drop in temperature in the US, Europe, and Japan leads to an increase in demand for fuel oil by 113 thousand barrels per day. Additionally, expectations of the US imposing further sanctions against the Russian oil industry, which could be announced by the Biden administration before his departure from the White House (January 20), are also supporting oil prices.
Risk Assets US stock markets were closed on Thursday due to national mourning for the death of former President Jimmy Carter. Today, investors are focused on the December employment report in the US, which is expected to show an increase in non-farm payrolls (80% of workers who produce the entire US GDP) by 164 thousand (227 thousand in November). Data on a resilient labor market could heighten investors' concerns about further inflationary pressures and the need for the Federal Reserve to maintain high interest rates for a longer period.
Safe Assets Safe assets showed low volatility during Thursday's trading amid a lack of significant geopolitical news and ongoing uncertainty regarding the further development of global economies. As a result of a slight increase in demand for safe-haven assets, the price of gold rose by 0.2%, while expectations of sustained tight monetary conditions in the US led to an increase in the dollar index (+0.1%).