Lackluster Sunday Despite Financial Sanctions Relief

EghtesadOnline: Equity markets remained almost unaffected by the news of the United States easing financial restrictions on Iran, as trading was minimal while the country heads into holidays commemorating the martyrdom anniversary of Imam Hussein (PBUH) and his companions.

News ID: ۷۳۷۴۷۶

13 October 2016

On Saturday, the administration of US President Barack Obama further lifting financial sanctions on Iran through regulatory measures that could significantly bolster Tehran’s ability to access global financial markets and attract foreign investment, the Wall Street Journal reported.

The US Treasury Department on Friday released new guidelines for dealings with Iran that loosen restrictions on the country’s ability to trade in US dollars, according to the documents published on US Treasury’s website.

The Treasury also widened potential business partners for non-American investors in Iran by announcing that US-sanctioned Iranian entities can partake in projects provided they aren’t the controlling shareholder.

Other than being a political victory for President Hassan Rouhani at home and another success for Foreign Minister Mohammad Javad Zarif who brokered the historic nuclear deal with world powers, the change can help increase foreign investment in Tehran’s securities markets.

For those who are able to get involved with Iranian securities, there are some decent gains to be made, although there are many risks too, according to Euromoney.

TEDPIX, the TSE’s main index, has more than tripled in value over the past four years, rising from around 24,000 points in August 2012 to more than 78,000 points by August this year. In comparison, the MSCI Emerging Markets index has lost 8% of its value over this period, while the MSCI Frontier 100 Index rose by 26.5%.

Of course, a stock market would not be a stock market without volatility, and there has been plenty of that too. TEDPIX was on a bull run from late 2012 until it peaked at 89,500 points on January 5, 2014. Some of those gains drifted away over the course of the next two years, but the market has rebounded strongly this year.

The index shot up in January, around the time the sanctions deal was confirmed. It continued to rise in February and March.

Thereafter, some ground was lost, with a 9% fall in the second quarter of the year, followed by a rebound in July and August. Even with that second quarter slump, the market was up 26% since the turn of the year.

This year’s movements reflect two big (and opposing) trends: enthusiasm for companies’ prospects in a post-sanctions era, mixed with realism about the difficulty in attracting capital from overseas.

For investors, this means that stocks have to be chosen with care. Sentiment and rumor play a big part in the trajectory of stocks on TSE, not least because retail investors account for around half of the trading volumes, but also because reliable information is often a scarce commodity.

Sunday’s Markets

Tehran Stock Exchange’s main index gained 218.80 points or 0.28% to end Sunday trade at 77,435.8.

More than 870 million shares valued at $63 million changed hands for the day.

Absal Home Appliances Company was the biggest riser, going up 4.99% to 4,419 rials per share.

Sina Chemical Industries incurred the biggest loss among all TSE-listed companies, as it went down 5% to 15,860 rials per share.

Chadormalu Mining and Industrial Complex gave the biggest boost to the benchmark, followed by Golgohar Mining and Industrial Complex and National Iranian Copper Industries Company.

Bandar Abbas Oil Refining Company weighed the most on TEDPIX, followed by SAIPA Group and Bank Pasargad, acording to Financial Tribune.

The Price Index gained 77.70 points or 0.28% to reach 27,489.9.

The First Market Index rose by 218.70 points or 0.41% to register 54,218.6.

The Second Market Index won 91.20 points or 0.05% to post 169,152.2.

The Industry Index gathered 249.80 points or 0.39% to hit 64,605.7.

The Free Float Index advanced by 179.24 points or 0.21% to record 86,228.60.

The TSE 30 Index was up by 10.60 points or 0.34% to settle at 3,147.1 while the TSE 50 Index edged up by 9.80 points or 0.32% to finish at 3,066.5.

IFX’s More Rapid Rise

The over-the-counter Iran Fara Bourse’s main index IFX added 2.66 points or 0.33% to end Sunday trade at 818.17.

Over 167 million securities valued at $51.6 million were traded for the day.

Rail Pardaz Seir Company saw the highest number of traded shares, as 22 million of its shares were traded.

Pegah Golestan Dairy Company accounted for the highest trade value as about $1 million worth of its shares changed hands.

Mavad Vizhe Lia Company, Pegah Golestan Dairy Company and Kharazmi Information Technology Development Company had the highest value increase.

Tuka Refractories, Arfa Steel Company and Lavan Oil Refining Company had the highest decline.

Marun Petrochemical Company, Shiraz Oil Refining Company and Esfahan Steel Company gave the biggest boost to the IFB benchmark.