TEDPIX, IFX Lackadaisical

EghtesadOnline: Stocks don’t have much going for them these days. The combined threats of rising interest rates, weakening growth in global commodity prices and lingering political risks have dented investors’ sentiment, leading to a quiet week for equities.

News ID: ۷۴۵۰۳۱

24 February 2018

TSE’s main index TEDPIX shed 191 points or 0.2% during the week that ended on February 21 to reach 98,157.3.

The smaller over-the-counter exchange market Iran Fara Bourse’s benchmark index IFX gave up 10.8 points or 1% during the week to stand at 1,097.

FX Stabilizes, Commodities Fluctuate

The volatility in the foreign exchange market stabilized last week following the unveiling of the Central Bank of Iran’s rescue package, which allowed banks to issue certificates of deposit with 20% interest rates for two weeks as of last Saturday, according to Financial Tribune.

Sapping forex and gold markets’ attraction and leading capital back to banks’ coffers is a stabilizing move in the short run, but traders see it as being against equities’ growth if turned into a long-term policy.

Bloomberg’s Commodity Index shows that commodities’ rally into 2018, which reached level unseen since 2015 in January, suffered a stroke last week and dropped to its late December levels.

However, analysts are optimistic about the rest of 2018. The multinational commodity trading and mining company Glencore said in a recent report that “the potential of synchronized global economic growth, emerging inflation, supportive commodity fundamentals and the emerging electric-vehicle story suggest a positive outlook for commodities”, Bloomberg reported.

Lingering Political Risks

Last week had both good and bad news on the political front.

The good news is that the Financial Action Task Force announced on Friday that it would continue suspending punitive measures against Iran for six more months.

The move, according to Al-Monitor, is meant to avoid creating a crisis at a time of political fragility and uncertainty over the fate of the landmark nuclear deal.

This is while US critics of Iran urged the financial watchdog to remove the country from FATF’s “gray list” and put it back on a blacklist.

US Vice President Mike Pence said on Thursday that the Trump administration will not recertify the 2015 Iran nuclear deal.

Pence’s comment increases the likelihood of reimposition of US sanctions on Iran, including but not limited to international sales of Iranian crude, S&P Global Platts reported.

In January, US President Donald Trump renewed waivers on nuclear-related sanctions for another 120 days but warned congress and the US’ European allies that they need to “fix” the nuclear deal or the US would withdraw from it. That set a new deadline of May 11 for the next sanctions waiver.

Investors were more spooked as Iran’s Deputy Foreign Minister Abbas Araghchi said on Thursday that Iran would withdraw from the nuclear agreement if there is no economic benefit and major banks continue to shun the Islamic Republic, Reuters reported.

Weekly Trade in Detail

Over 6.08 billion shares valued at $311.6 million were traded on TSE during last week. The number of traded shares and trade value rose by 83% and 63% respectively compared to the previous week.

Trading at Iran’s stock markets starts on Saturday and ends on Wednesday.

TSE’s First Market Index gained 65 points or 0.1% to end at 69,790.9. The Second Market Index dropped by 777 points or 0.4% to close at 208,674.8.

At IFB, over 1.41 billion securities valued at $266.42 million were traded, with the number of traded shares and trade value growing by 7% and 85% respectively compared to the previous week.

IFB’s market cap also gained $754.5 million or 2.5% to reach $30.59 billion.

Its First Market witnessed the trading of 162 million securities valued at $7.51 million, indicating a 35% and 32% drop in the number of traded securities and trade value respectively.

About 569 million securities valued at $25 million were traded in the Second Market, with the number of traded securities rising 60% while trade value went down 10% week-on-week.

Over 10 million debt securities valued at $192.4 million were also traded at IFB, surging 184% and 177% in the number of bonds traded and their value respectively.

Exchange-traded funds also grew 92% in trade number and 65% in value to reach 98 million worth $21.8 million.

Housing mortgage rights’ trade was down, as it reached 32,000 securities worth $5.02 million, down 7% and 8% respectively.

Freefalls in FX, Gold Markets

A comparison of markets over the past week shows TEDPIX had the least drop during the trading week, followed by IFX, Bahar Azadi gold coin, the US dollar and euro.

Last week’s blow dealt to FX and gold did impact their annual gains in the current fiscal year (ending March 20) and shifted market rankings: euro was still first, followed by TEDPIX, IFX, gold and USD.

The rial was quoted at 55,230 against euro by Thursday’s close. It marked a 9.41% freefall for the European currency.

Euro’s gains so far this year reached 34.31%, having started the year at 41,120.

TSE posted a 27% gain so far this year, while the figure stood at 25.3% for IFB.

The US dollar lost 5.17% against the rial last week to 44,930. The dollar’s gain so far this year reached 19.87%, having started the year at 37,480.

As for gold, Bahar Azadi gold coin dropped 4.99% last week to 14.45 million rials. Its gain so far this year stood at 23.39%.