Kazakhstan: Sticky services keep disinflation fragile: Yet we expect a 500 bps cut by end-2027; we rotate from Meukam Feb-35 into Feb-30

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Kazakhstan: Sticky services keep disinflation fragile: Yet we expect a 500 bps cut by end-2027; we rotate from Meukam Feb-35 into Feb-30

vored duration stories across Frontier Local

Markets, and our long-standing Meukam Feb-35s long has now hit our target. The curve

has rightfully inverted, and with the initial thesis having largely played out, given the

improved above-the-line fiscal picture and disinflation story, we now look to reassess our

position on the curve. 10y Meukams remain over 100bps cheap to both current and end-26

FV (Figure 3),0yMeukamsremainover150bpscheaptocurentandend-26FV and the overall duration environment is still attractive, but the asymmetry for

long-dated bonds here is less compelling and we see a stronger case to reconsider where along

the curve we are best positioned.

We now see greater value in the belly of the curve as the NBK kickstarts an easing cycle

and risks to the long end have, in our view, risen. We now expect cuts in every quarter from

4Q26 to end-27. Across previous NBK easing episodes, 5s10s steepened more than 2s10s,

particularly when from a starting point of wide real rates (Figure 4). We also retain some

exposure to the structural story rather than a view driven primarily by the near-term policy

rate path and liquidity conditions. The key risks to longer-dated bonds are now twofold. First,

quasi-sovereign fiscal stimulus could still be large in H2 as Samruk-Kazyna continues to

pursue an ambitious investment agenda, focused on transport, energy and petrochemicals,

with telecoms and data centers emerging as new priorities, even as Baiterek's contribution to

demand is likely to contract. Second, should elevated inflation expectations persist or even