ANALYSIS: KASE index falling was on similar world markets` movement

17.07.08 17:27
/IRBIS, Ruslan Dzubaylo, July 17, 2008/ - July 9 KASE index reached its minimal in 2008 - 2,374 point. Since July beginning decreasing made 8.8%, since year beginning - 10.0%. Falling relative to maximal index value in the current year didn't exceed 17.5%. Below the Informational Agency of Financial Markets IRBIS (Almaty) publishes its opinion on Kazakhstan share market situation. Prices of Kazakhstan banks` shares fall on main share indexes decreasing Notwithstanding the last changes in KASE index` representative list, instruments of financial sector of the country are still have a considerable weight in it. Described above index decreasing by 44.6% was conditioned by prices falling of financial sector's shares, which are included in representative index list (now they are common shares of 5 denominations and preferred shares of 2 denominations of 5 Kazakhstan banks) cheapened shares of primary sector - by 43.1%, telecommunication sphere - by 12.3%. More detailed analysis of bank sector price dynamic indicates that the fall was the feature of issuers` instruments, which have parallel listing with Kazakhstan Stock Exchange (KASE) on London Stock Exchange (LSE) (tabl.1). The main liquidity and activity on these instruments, as a rule, came to LSE, due to it; these instruments are under system risk of Britain and correspondently world markets. The main stake of free float of such companies came to foreign investors, who (1) invested in Kazakhstan, as in developing economy, with the aim to get fast and big profit; (2) under the influence of panic moods are capable of quickly closing of Kazakhstan position, without understanding the situation; (3) as a rule are not qualified on acute condition of Kazakhstan issuers. Such investor base easy and predictably reacts to behavior of leading world indexes. Table 1. Price dynamic of bank equity instruments, included in representative list of KASE index from July 1 to 9 2008 (in %) ------------------------------------------------------------- Share Price Share in Issuer code trend index ------------------------------------ ----- ------ -------- BTA Bank JSC BTAS -0.16 15.77 ------------------------------------ ----- ------ -------- Bank CenterCredit JSC CCBN -1.41 9.45 ------------------------------------ ----- ------ -------- Halyk Savings Bank of Kazakhstan JSC HSBK -11.45 13.36 ------------------------------------ ----- ------ -------- Kazkommertsbank JSC KKGB -14.15 13.88 KKGBp -6.67 2.39 ------------------------------------ ----- ------ -------- Temirbank JSC TEBN 0 3.49 TEBNp +9.80 0.39 ------------------------------------------------------------- On July beginning problems in American financial centre seriously worsened after it was known about condition of major American mortgage organizations Freddie Mac and Fannie Mae. Investors all over the world began mass selling of financial organizations` securities. Global depositary receipts of Kazkommertsbank JSC and Halyk Savings Bank of Kazakhstan JSC were not exceptions. Over July these securities quotation on LSE decreased by more than 13%, what cannot help but reflect on these shares quotation on KASE. Prices decreasing on world commodity markets force primary company's prices downward By the same reasons hydrocarbon raw price on world markets fell by $10. As a result, quotation of Exploration Production KazMunaiGaz JSC, which is under high price risk, reacted by decreasing by 7.62%. On shares of other representative of primary market - KAZAKHMYS PLC - was fixed decreasing by 17%. Securities' selling of this copper giant was connected with unfavorable situation on world metal markets and Kazakhstan activity on improving its strategic influence on primary sector (recent deal on exchange ENRC shares for 15% of KAZAKHMYS PLC). As a result share price of Exploration Production KazMunaiGaz JSC and KAZAKHMYS PLC provided KASE index fall by 43 % during described lag (Tabl.2). Situation in telecommunication sector is calm During analyzed period the sole representative of telecommunication sphere in representative list - Kazakhtelecom JSC made minor influence on index. Common shares of this company corrected price till previous level after short time and unjustified, from the viewpoint of company activity, growth at the end of May - June beginning. Leap in KZTK price was conditioned by purchase of considerable block of shares by one of participants. Situation has become steady Judging by last exchange data, situation on KASE share market has become stable. By this information preparing time, KASE index was at 2,426 point. Normalization on world share markets contributed to stability after announcement that badly suffered Freddie Mac and Fannie Mae will be supported by the government. Negotiations of KAZAKHMYS PLC and Rusiian Metalloinvest on possible merge also influenced the market. In accordance with above-mentioned facts, we forecast correction of KASE index to 2500 point in nearest future. [2008-07-17]