Iran: Equity Market Sinks as Selloff Continues

EghtesadOnline: After ending the past week 3.5% lower, the Tehran Stock Exchange continued to reel under selling pressure on Saturday. Falling global stocks, US-China trade war, declining oil and commodity prices and the effects of US sanctions all weighed on sentiment.

News ID: ۷۴۶۲۴۷

26 November 2018

TSE's benchmark gauge broke the psychological 175,000 level, falling 4,460.3 points or 2.54% on Saturday to end trading at 171,252.93. The over-the-counter market Iran Fara Bourse’s main index IFX also lost 43.36 points or 2.27% to close Saturday trade at 1,864.59.

According to analytical website Donyaye Bourse, the continued decline in international oil prices eclipsed the optimism over monthly earnings reports of export companies. Oil prices continued to fall Friday, amid weaker global demand and increased output in the United States, to the lowest price this year. The cost of a barrel dropped below $60, a decrease of more than 20% from its peak last month, Financial Tribune reported.

President Donald Trump has credited Saudi Arabia with the falling oil prices. "Thank you to Saudi Arabia, but let's go lower!" he wrote in a tweet on Tuesday. He called the drop "a big Tax Cut for America and the World."

But the drop in prices has raised concerns about the international economy, as well as domestic growth in the United States. It has also dampened the mood for investors in Iran's bourses as most of the listed companies at TSE are export-oriented.

Drop in oil prices could affect the Iranian economy as a whole, which in turn could affect production and foreign exchange rates. According to the International Monetary Fund (IMF) forecast, GDP growth in Iran this year (2018) will be negative by 1.5 % and will worsen in 2019, reaching minus 3.6%.

At present, the price of oil is less than $70 per barrel. Meanwhile, according to a UN agency official, one of the problems of the Iranian economy is the mismatch between the official exchange rate and the informal market price.

While commodity stocks led the rout on Saturday, the effects of US sanctions are among investors' concerns as the Iranian month of Azar (which began on Thursday) will be the first full month that companies have dealt with the sanctions and therefore their earnings reports will be of key significance when the month ends.

Global stocks extended declines last week, with tech and auto sector shares leading to the downside, as investors exited risk markets all over the world amid persistent signals of slowing economic growth and questions of the fate of US-China trade talks

TEDPIX Starts Trade Week at 171,252

Tehran Stock Exchange’s main index lost 4,460.3 points or 2.54% on Saturday to end trading at 171,252.93.

About 1.7 billion shares valued at $39.74 million changed hands at TSE for the day.

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

Magsal Animal Husbandry and Agriculture Co. was the biggest winner as its shares went up 5% to 3,510 rials per share.

Pardis Petrochemical Company incurred the biggest loss among all TSE-listed companies and went down 5.05% to 16,154 rials per share.

Mobarakeh Steel Co. contributed the most to the benchmark's fall, followed by Persian Gulf Petrochemical Industries Company, and Golgohar Mining and Industrial Complex.

Bank Mellat gave the biggest boost to the benchmark index, followed by Saipa Group, and Iran Khodro Group.

The Price Index lost 1,298.89 points to close at 49,872.60.

The First Market Index was down 3,379.88 points to post 126,580.54. Second Market Index decreased by 8,429.64 points to reach 339,127.17.

The Industry Index went down by 4,518.26 points to register 155,284.44. Free Float Index was down 4,377.38 points to hit 183,106.87.

The TSE 30 went down 262.55 point to settle at 8,519.30 and the TSE 50 ended 227.57 points lower to finish at 7,491.99.

IFX Down 2.27%

Iran Fara Bourse’s main index IFX lost 43.36 points or 2.27% to close Saturday trade at 1,864.59.

About 739.55 million securities valued at $34.65 million were traded at the over-the-counter exchange for the day.

Goharzamin Iron Ore Co. had the highest number of traded shares and trade value as 192.78 million of its shares worth $13.37 million changed hands.

Sabzevar Lar Cement Co, Goharzamin Iron Ore Co, and Tuka paint Co. registered the highest value increase.

Zagros Petrochemical Co., Lavan Oil Refining Company, and Iranol Oil Co. suffered the biggest decline.

Marun petrochemical Co, Zagros petrochemical Co, and Middle East Mines Industries Development Holding Company had the most negative impact on IFX.