Shares Advance on High Forex Hopes

EghtesadOnline: After a one-day hiatus, Tehran stocks resumed bullish trend on Monday climbing 1.24% with small cap stocks at the center of attention.

News ID: ۷۵۰۲۵۳

16 June 2020

Benchmark of Tehran Stocks Exchange, TEDPIX, gained 14,699 points for the day to close trading session at an all-time high of 1,200,120.

Equal-weighted index, which gives the same weight to all shares irrespective of their market capitalization, closed higher at 2.3%.

This is while the TSE-30 Index finished 0.73% lower, indicating that the benchmark growth was driven mainly by shares of smaller listed companies. TSE-30 Index tracks performance of 30 largest companies in terms of the market cap.

Market rallied on reports about asset revaluation of a number of listed companies as well as a government permission to increase prices of a range of products, most particularly in petroleum, refinery, tire, cement, pharmaceuticals and food companies.

The government allowed manufacturing companies to increase prices because henceforth they will have to buy foreign currency at higher rates for their import needs.

It also shortened the list of imported goods eligible for subsidized currency (42,000 rails for a USD). Selected food and medicine importers should buy forex from the secondary market, known as Nima, where rates are as high as 155,000 rials to the dollar.

Rising inflationary expectations emanating from the surge in currency prices is also seen as a main driver of the market growth.

Dollar Rising

Major currencies gained again against the rial on Monday. The US dollar rose 1% to fetch 182,000 rials in Tehran’s open market, the highest in history. The greenback sold for 178,900 rials in Central Bank of Iran’s affiliate moneychangers, up 0.6%.

Besides creating inflationary expectations, the soaring value of the dollar can help export-oriented listed companies earn more when their earnings are converted into rials.

Market Performance

About 8.22 billion shares worth 132.45 trillion rials ($735.8 million) changed hands at TSE for the day.

Soufian Cement Company was the biggest winner as its shares went up 36.27% to 29,830 rials per share.

Piazar Industry and Agriculture Company incurred the biggest loss among all TSE-listed companies and went down 4.79% to 57,290 rials per share.

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

Telecommunication Company of Iran gave the biggest boost to the benchmark index, followed by Iran Khodro Company, Pars Petrochemical Company and Tehran Oil Refining Company.

Iran Fara Bourse main index, IFX, gained 214.35 points or 1.61% to close Monday trade at 13,496.23.

About 2.57 billion securities valued at 54.12 trillion rials ($300.68 million) were traded at the over-the-counter exchange for the day.

Esfahan Steel Company had the highest number of traded shares as 310.15 million of its shares worth 2.15 trillion rials ($11.96 million) were traded.

Esfahan Steel Company, Lavan Oil Refining Company, Shahid Tondgooyan Petrochemical Company and Iran Office Machines Industries Company had the most negative impact on IFX.

Middle East Mines and Mineral Industries Development Holding Company gave the biggest boost to IFX, followed by Gohar Zamin Iron Ore Company, Zagros Petrochemical Company and Hormozgan Steel Company.