ITS Indexes Family: Results for November 2024 – January 2025

 ITS Indexes Family: Results for November 2024 – January 2025

*The KASE and AIX Qazaq indexes are calculated based on assets denominated in tenge

 

1. ITS indexes family in the context of key global financial market indicators

If we look at the performance of the ITS index family – the ITS World global market index (ITSW) and the ITS Shariah Islamic securities index (ITSS) – and compare their returns with similar indexes in the U.S, Europe and Asia, we can see that both confidently hold leading positions and are in no way inferior to their competitors.

Why was this time frame – from 1 November 2024 to 1 February 2025 – chosen? The reason is that trading in shares of an ETF based on the ITSW index portfolio began on 8 November 2024. Then, on 14 January 2025, trading started for the first Islamic ETF in Central Asia, which is based on the portfolio of shares included in the ITS Shariah index (ITSS). This makes it especially interesting to summarise the initial results for this period, as it marks not only the introduction of the indexes themselves but also the active trading of real ETFs based on them.

When comparing the overall returns of the ITS index family with the returns of major global indexes, we can see that they are not lagging and even exceed average benchmarks. The return of the ITSS Islamic securities index ranks third, behind only Germany’s DAX and the U.S NASDAQ Composite.

The return of the ITSW global market index is slightly lower than that of ITSS. However, it still outperforms key global benchmarks, particularly the U.S indexes – the Dow Jones (DJIA 30) and the broad-market S&P 500.

As for comparing the ITSW and ITSS indexes with their Kazakh counterparts – indexes calculated on the KASE exchange (KASE index) and the AIX exchange (AIX Qazaq index) – it may appear that the indexes of these exchanges outperform the ITS index family in terms of returns. However, it is important to consider that the KASE and AIX indexes are based on Kazakh securities denominated in Kazakhstani tenge, whereas the ITS index family is based on foreign securities denominated in U.S dollars. If we adjust the returns of the KASE and AIX indexes for the tenge devaluation, their returns in dollar terms would be +3.19% and +1.71%, respectively, which is significantly lower than the returns of the ITS indexes.

 

2. Key growth drivers of ITS indexes

The main drivers of growth in the ITS indexes, as well as in other global indexes during the review period, were primarily the shares of leading technology companies engaged in the development, implementation and sale of cloud technology services, as well as big data processing using artificial intelligence.

Additionally, a significant contribution to index growth came from Tesla (TSLA) shares, which saw a sharp rise in global demand in recent months, partly due to Elon Musk’s close relationship with newly elected U.S President Donald Trump. These general factors influenced returns in both indexes.

At the same time, each index had its own standout performers that delivered the highest returns over the period. In the ITSW global market index, the top performer was streaming music service Spotify Technology (SPOT), whose shares surged by 43% from 1 November to 1 February. Meanwhile, in the ITSS Islamic securities index, the best-performing stock during the same period was Broadcom (AVGO), one of the leading chip manufacturers, which increased in market capitalisation by 26.43% over three months.

 

3. Scheduled rebalancing of ITS index portfolios

At the beginning of February, in accordance with the index portfolio formation rules, a scheduled rebalancing was carried out. The recombination of assets in the ITS Shariah (ITSS) Islamic securities index takes place on a monthly basis, while the portfolio rebalancing of the ITS World (ITSW) global market index occurs once per quarter. Early February marked the time for rebalancing the portfolios of both indexes. As a result, two stocks were replaced in the ITSS index and three in the ITSW index.

 

Index ITSW

 

Index ITSS

 

4. Description of companies whose shares are included in the index portfolios

Qualcomm (QCOM)

Qualcomm (QCOM) is one of the world’s leading chipmakers. Its chips are used in numerous mobile devices, but the company is best known for its collaboration with Apple, whose gadgets contain up to eight QCOM chips. Qualcomm consistently generates strong profits, with an average annual return exceeding 15% over the past five years.

In addition to this, Qualcomm offers its shareholders solid dividends, currently reaching 2%. Following its latest earnings report for Q4 2024, both revenue and profit exceeded analysts’ expectations, leading to a share price increase of more than 10% since the start of the year.

As for risks, the main concerns for QCOM are Apple’s transition to in-house chips and Huawei’s growing market share in China, which could threaten key Qualcomm clients. However, most analysts do not view these risks as overly critical and maintain a positive outlook on the company’s stock, projecting an 18% growth potential.

 

Caterpillar (CAT)

Caterpillar (CAT) is a globally renowned developer and supplier of road and construction machinery, representing a powerful, traditional industrial equipment manufacturer on a global scale.

The company’s products can be found in virtually every country, making Caterpillar a fundamentally stable business with a solid foundation. However, this also means that investors should not expect exceptionally high returns from its shares in the long term. That said, the stock’s performance over the past decade remains impressive, having gained more than 250% over that period.

Stock price movements are largely influenced by the current economic cycle, which is a key factor to consider when evaluating Caterpillar for long-term investment. At present, the stock’s potential return is modest, at just over 6%. However, as global economic growth accelerates, its share price is likely to see stronger upward momentum.

 

Costco Wholesale (COST)

Costco is an outstanding business. Retail remains a thriving and in-demand sector, and while not every company can run it successfully, Costco certainly can. The company is particularly excelling now, as retail sales are experiencing a boom amid high consumer incomes and spending.

Costco has significant economic advantages, largely due to its scale. In the first quarter of 2025, which ended on 24 November, the company’s net sales totalled $61 billion. This massive figure makes it the third-largest retailer in the world.

A typical Costco warehouse stocks only 4,000 product lines—far fewer than competing supermarkets. However, this enables the company to purchase each item in vast quantities, giving it unparalleled leverage over suppliers. This approach allows Costco to secure the best terms and offer customers lower prices.

At the same time, customers are incentivised to return through annual membership fees, which are required for club status and access to Costco stores. These fees also contribute significantly to the company’s net profit.

This is reflected in the steady growth of sales per store. Even in recent years, despite the pandemic, inflationary pressures and high interest rates, Costco has consistently increased this metric.

All of this supports the company’s strong profitability. Over the past decade, from the 2014 to 2024 financial year, Costco’s net profit grew by 258%. Its strong financial performance allows management to pay substantial special one-off dividends in addition to regular payouts. Analysts hold a positive outlook on the business, but the target price is currently under review, as COST shares have reached previously set targets and investors are awaiting new evaluations and strategic plans.

 

Garmin (GRMN)

Garmin Ltd. (GRMN), based in Olathe, Kansas, is a manufacturer of innovative navigation and communication equipment using global positioning system (GPS) technology. The company has been successfully expanding for many years, and its products are popular worldwide.

In recent years, Garmin Ltd. has maintained a stable annual cash flow growth of around 10%. As a result, its shares have surged by 175% over the past two years. According to the latest quarterly report, earnings per share exceeded forecasts by 37%, while revenue was 10% higher than expected.

The company continues to grow successfully and holds a near-monopoly position in certain segments, such as marine and river navigation for small vessels.

Garmin Ltd. shares have been rising so rapidly that analysts often struggle to update their target prices in time. As a result, the company’s consensus forecast price is currently lagging significantly behind the actual stock price and is under review.

 

Wix.com (WIX)

Wix.com is a popular Israeli platform for creating websites of any complexity without professional coding skills. According to the company, anyone – whether an expert or a complete beginner – can build a fully functional website with ease.

A free website on Wix.com can be created in two ways: using the Wix Editor, which provides nearly all available features but requires some effort, or through ADI, an artificial intelligence tool that generates several ready-made design and content options within seconds. This AI-driven approach is Wix.com’s key feature, allowing the company to differentiate itself and attract increasing attention from external investors.

This growing interest is also reflected in WIX stock prices, which have been rising steadily for almost three years, increasing nearly 2.7 times over that period. Despite this rapid growth, many analysts believe there is still significant upside potential. This is supported by the company’s target price, which is set 10% above the current market level.