Tehran Stocks Bleed as Optimism in Bank Shares Fade

EghtesadOnline: Nervous investors on Sunday dumped bank stocks after their early optimism about the prospects of banks faded. Bank shares had become a new favorite of investors after the rial gains curbed the love for the shares of export companies.

News ID: ۷۴۶۲۳۸

19 November 2018

The knee-jerk reaction hit key indices with Tehran Stock Exchange's main index collapsing 5,262 points and the Fara Bourse's main index losing 31.58 points or 1.65%.

Bank stocks looked to benefit from the banking reform initiative which is seemingly a priority of the Economy Ministry and the Central Bank of Iran to address  domestic economic woes.

But as analysts had forecast, chronic problems besetting lenders, coupled with the new US sanctions have created a major roadblock for the growth of banks, Financial Tribune reported.

According to the latest CBI report, the government sector owed 2.93 quadrillion rials ($21.61 billion) to the banking system on Sept. 22, -- a 23.8% increase compared to the same month last year. The figure grew by 13.7% compared to the last yearend.

The non-government sector, however, had 11.65 quadrillion rials ($85.7 billion) in liabilities to the banking sector, a 17.5% rise compared to the same month last year and a 6.8% rise compared to end of the last fiscal.

Iranian banks also have piled up massive debts to the CBI and their balance sheets are loaded with soured loans.

The sanctions on Iranian financial firms reimposed two weeks ago could endanger the flow of humanitarian goods as foreign banks and suppliers abandon business ties with their partners in Iran, analysts and experts warn.

In recent months, some European banks have reportedly refused to process payments even from Iranian firms that are exempt from sanctions out of fear of US penalties.

The US Treasury’s Office of Foreign Assets Control, or OFAC, says it has blacklisted several Iranian banks that met the sanctions criteria laid out in executive orders linking the firms to what the US deems illegal activities.

Auto stocks, which saw rapid growth in recent days, also took a battering on Sunday as investors saw no price hike for the beleaguered companies.

The rial's gains in the past week also contributed to the selloff in the stock market. On Sunday, however, the US dollar rose again and was traded at 136,500, up from the previous day's 130,000 rials.

Market Indices

Tehran Stock Exchange’s main index lost 5,261.61 points or 2.94% on Sunday to end trading at 173,557.7.

About 2.19 billion shares valued at $55.09 million changed hands at TSE for the day.

Trading at TSE and Iran Fara Bourse starts on Saturday and ends Wednesday.

Hamedan Glass Co. was the biggest winner as its shares went up 5% to 3,467 rials per share.

Damavand Mining Company incurred the biggest loss among all TSE-listed companies and went down 5% to 29,843 rials per share.

Mobarakeh Steel Co. contributed the most to the benchmark's fall, followed by Omid Investment Group, and Persian Gulf Petrochemical Industries Company.

Asan Pardakht Persian gave the biggest boost to the benchmark index, followed by Mobile Telecommunication Company of Iran, and Iran Casting Industries Co.

The Price Index lost 1,533.89 points to close at 50,544.7 First Market Index was down 4,349.46 points to post 128,505.5.

The Second Market Index decreased by 8,185.49 points to reach 342,618.5. Industry Index went down by 4,749.11 points to register 158,005.9.

The Free Float Index was down 5,892.88 points to hit 184,994.23. TSE 30 went down 302.52 point to settle at 8,673.7 and the TSE 50 ended 249.05 points lower to finish at 7,626.2.

IFX Down 1.65%

Iran Fara Bourse’s main index IFX lost 31.58 points or 1.65% to close Sunday trade at 1,880.05.

About 824.32 million securities valued at $33.05 million were traded at the over-the-counter exchange for the day.

Esfahan Steel Co. had the highest number of traded shares and trade value as 164.1 million of its shares worth $3.23 million were traded.

Goharzamin Iron Ore Co, Ghaed Basir Petrochemical Co., and Shirvan Sugar Co. registered the highest value increase.

Iran Cultural Heritage and Tourism Investment Group, Mihan Insurance, and Afranet suffered the biggest decline.

Marun Petrochemical Co, Esfahan Steel Co., and Zagros Petrochemical Co. had the most negative impact on IFX.