The market overview was prepared by analysts from the Association of Financiers of Kazakhstan (AFK).
Currency Market
The national currency ended the first trading sessions of February with a decline: as a result of trading on Monday, the weighted average exchange rate for the USD/KZT pair rose to 521.83 tenge per dollar (+3.63 tenge). The trading volume on the exchange was significantly below the average levels for the current year (223.1 million), totaling 152.7 million dollars (-32.5 million). Under conditions of low trading volumes, such movement may be attributed to the expected reduction in net foreign currency sales in the operations of the National Bank of Kazakhstan (from 1.3 billion dollars in January to 1.1 billion in February), unfavorable inflation data, as well as the weakening of the Russian ruble. It is noteworthy that the monthly increase in the Consumer Price Index (CPI) in the country accelerated from 0.9% to 1.1%, while the annual figure rose from 8.6% to 8.9%. Accordingly, interest rates in the system may remain high for longer than anticipated.
Diagram 1. USD/KZT Exchange Rate:
Source: KASE
Money Market
Money market rates on Monday showed varied changes (TONIA rose from 14.58% to 14.62%, while SWAP dropped from 10.76% to 10.33%). As can be seen, indicative rates are being maintained near the lower boundary of the base rate corridor, largely due to the sustained high volume of short-term liquidity in the system. Thus, the net position on the National Bank’s operations is close to 7.7 trillion tenge.
Stock Market
Against the backdrop of a further decline in risk appetite in global capital markets, the KASE index closed on Monday at 5,556.2 points (-1.6%). Sales were recorded in 9 out of 10 index instruments (declines ranging from 0.2% to 3.3%). Some investors may have closed long positions amid growing uncertainty in global markets and the significant rise in the local market (+1.1% in January after a 33.2% increase in 2024).
Oil
By the end of Monday, Brent oil prices fell to 76.0 dollars per barrel (-1.0%). In addition to a noticeable increase in the dollar index (+0.6%), pressure on prices was exerted by news of OPEC+'s decision not to change existing oil production parameters, but to maintain the decision to restore oil production starting in April of this year.
Risk Assets
A significant flight of investors from risk at the start of Monday's trading slowed somewhat by the end of the day due to news of a one-month delay in the implementation of U.S. tariffs on goods from Mexico and Canada. It is evident that these tariffs may become a negotiating tool for the new U.S. president, and investors should not react sharply to them. Nevertheless, key U.S. stock indexes ended Monday's trading down by 0.3% to 1.2%. Today, the focus is on statistics regarding job openings, as well as the financial results of Alphabet, Merck, PepsiCo, etc.
Defensive Assets
Liquidity from risk assets has clearly shifted to risk-free assets: gold and the dollar index rose by 0.6% on Monday against the backdrop of uncertainty surrounding the further developments regarding the White House trade wars.