Fresh Money Supply Breathes New Life Into Tehran Stocks

EghtesadOnline: Tehran stocks had one of their best weeks to date with spiking growth in every single index, all due to a meteoric rise in Wednesday trade.

News ID: ۷۴۵۴۵۹

17 June 2018

Tehran Stock Exchange’s all-share index, TEDPIX, gained 3,147 points or 3.3% during the week that ended on June 13 compared to the week before to close at 99,146.3. This brings the benchmark’s return since the beginning of the year (March 21) to 3%.

Iran Fara Bourse’s benchmark index, IFX, added 42.1 points or 3.8% to stand at 1,153.7 during the same week. The uptick has been quite higher for IFX, as its annual return up to the week’s close reached 5.2%.

Trading at Iran’s stock markets starts on Saturday and ends on Wednesday, according to Financial Tribune.

The trading week’s last day accounted for nearly all the two indices’ growth. TEDPIX jumped 2,767.58 points or 2.87% and IFX surged by 37.17 points or 3.33% on Wednesday. This was the largest single-day growth ever for both exchanges, and brought IFX to record a new all-time high.

Analysts believe a fresh surge of money supply revived the market on Wednesday which, in turn, stemmed from the increasingly devaluing domestic currency.

Significant amounts of money have lately been pooling into markets such as gold coin, foreign currency and real estate over what observers called speculative aims. Some of that capital circulating around was bound to enter the capital market, too.

Gov’t Puts a Spotlight on Stocks

Economy Minister Masoud Karbasian indirectly claimed credit for injecting fresh money into stocks via an Instagram post.

“Recent developments have caused people to look for alternative goods [as replacements] for their [devaluing] assets. As a result, capital has gone into [gold] coins, auto and real estate ... This sentiment has disrupted the markets,” Karbasian wrote on Thursday.

“The solution to the issue is highlighting the country’s macroeconomic realities. As such, the government intends to tame the money supply growth by channeling it toward productive sectors, exemplified by the capital market’s growth in the past two days.”

Mohammad-Bagher Nobakht, the head of Plan and Budget Organization, echoed the same sentiments in a TV interview late Tuesday.

“People don’t have to think they can only invest in currency, coin and auto markets. They have to know that the capital market is more attractive in comparison; investing in it will also mean supporting producers,” he said.

Nobakht, who also doubles as the government’s spokesperson, emphasized that the administration’s priorities are “supporting domestic production and restraining inflation”.

Weekly Trade in Detail

Over 5.55 billion shares valued at $317.8 million were traded on TSE last week. The number of traded shares and trade value surged by 199% and 171% compared to the week before.

TSE’s First Market Index gained 2,461 points or 3.6% to end at 71,605.7. The Second Market Index rose by 5,498 points or 2.75% to close at 204,816.6.

And at IFB, over 2.47 billion securities valued at $255.4 million were traded, with the number of traded shares and trade value skyrocketing by 410% and 213% compared to the previous week respectively.

IFB’s market capitalization also gained $697 million or 1.9% to reach $37.1 billion. The cap has grown by 6.2% since the year began.

Its First Market witnessed the trading of 334 million securities valued at $16.6 million, rising 500% and 754% respectively.

About 1.43 billion securities valued at $52.5 million were traded in the Second Market, with the number of traded shares and trade value jumping 627% and 478% respectively.

Over 7 million debt securities valued at $140.7 million were also traded at IFB.

Exchange-traded funds trade reached 41 million worth $13.3 million.

Housing mortgage rights’ trade also reached 500,000 securities worth $7.66 million.