TEDPIX Extends Rally to Notch New High

EghtesadOnline: Tehran stocks showed no signs of backing down on their rally, as they further extended their historic high on Monday.

News ID: ۷۴۵۴۷۸

19 June 2018

Tehran Stock Exchange's primary index, TEDPIX, was up another 2.03% or 2,081.14 points to close at the unprecedented level of 104,533.5. This is TEDPIX's fourth day of straight growth.

Analyzing the rally's trend shows that investors' interest is slowly moving away from the market as a whole and focusing on large-cap stocks.

As for Monday, the equal-weighed main index grew only 0.35% or 63.79 points to 18,350.92. This is the highest it has ever been, but the growth has significantly slowed compared to the day before last's 2.2% jump, according to Financial Tribune.

The same holds true for the Free Float Index, as it rose 1.9% or 2,141.7 points on Monday to extend its all-time high record to 115,125.31. The index had soared 3.2% on Sunday trade.

Traded shares and trade value also show that interest is only growing in the stock market. Over 2.55 billion shares worth $169.2 million were traded at TSE, registering a 40% and 29% growth respectively compared to Sunday.

"In recent days, daily trade volumes at TSE and IFB have nearly tripled and trade by non-institutional investors has picked up, which indicate the injection of new money supply to the market," Mohsen Khodabakhsh, the head of Securities and Exchange Organization's Markets and Exchanges Department, told Bourse Press.

The main drivers of the past few days' rallies were also at the forefront on Monday. Chadormalu Mining and Industrial Complex was at the top with 305.91 points, followed by Mobarakeh Steel Company and Golgohar Mining and Industrial Complex with 247.64 and 197.8 points espectively. Petrochemical stocks came next on top.

Trade was marching on at Iran Fara Bourse, too. Its main index, IFX, gained 10.37 points or 0.87% to stand at 1,201.71, which is another all-time high record. This is IFX's fifth day of consecutive growth.

Over 1 billion securities worth $76.4 million were traded at IFB on Monday. The number of shares traded surged 64% compared to Sunday, yet trade value inched down 0.39%.

The same mix of stocks at TSE dominated IFB's Monday trade, with metal producers having more weight. Zagros Petrochemical Company was at the top of IFX boosters with 6.95 points, followed by Hormozgan and Esfahan steel companies with 3.31 and 2.65 points respectively.

This is while Sunday's primary index boosters, namely Marun Petrochemical Company and Middle East Mines & Metal Industries Development Holding Company, were now IFX's top two laggards.

> TSE Director on Recent Rallies

The recent rallies, according to TSE's managing director, is primarily because of the government's positive signals to capital market investors as well as the fact that companies' shares are currently priced below their actual value, making most buys a bargain.

"Investors are looking forward to government decisions regarding the capital market and now the administration has given the green light and new money supply has entered the market," said Hassan Qalibaf-Asl in a TV interview on Sunday night.

The "green light" seems to refer to the recent remarks by the head of Plan and Budget Organization, Mohammad Baqer Nobakht, and Economy Minister Masoud Karbasian in support of investing in equities.

"Setting up a productive factory, similar to the ones currently listed on the capital market, is at present definitely more expensive than buying the existing ones' shares," Qalibaf-Asl said.

Market prices hovered around unprecedented lows since late December, most of which is due to the rial's sprinting devaluation against the US dollar. The potential was always there to recoup shares' losses in dollar terms, but it needed fresh money to do so. Thus, the new surge of money supply has acted as the ignition key to a dormant engine.

And "this has only begun now", said Qalibaf-Asl. "Companies' revenues and [subsequently] their share prices have not yet grown on par with the rise in foreign currency rates."

Last fiscal year (March 2017-18) saw Iran going through a currency shock, as the rial lost over 30% of its value against the US dollar. Things exacerbated further in the current year with the currency losing another 20% to around 58,650 rials by April 9, before USD/IRR was pinned to 42,000 rials by the government to control the volatile market. Despite the enforcement, however, unofficial rates in the black market have kept increasing.