TSE Gauge Ends Trading Week 1.2 Percent Higher

EghtesadOnline: Tehran Stock Exchange’s main index TEDPIX gained 1,024 points or 1.2% during the fourth week of the Iranian month that ended on October 18 to close at 85,768.

News ID: ۷۷۹۸۳۰

23 October 2017

This is the first week the index is posting gains in the Iranian month of Mehr (Sept. 23-Oct. 22).

The main index of the smaller over-the-counter exchange Iran Fara Bourse IFX kept its losing momentum for the week, shedding 14.69 points or 1.5% during the week to end at 929.71.

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

Interestingly, TEDPIX made its biggest gain so far this month on Oct. 21 by growing 0.61%, just a day after US President Donald Trump announced that his administration “cannot and will not” certify Tehran’s compliance with the Iran nuclear agreement to Congress.

IFX followed with a 0.51% uptick on the same day.

Trump said the US will remain in the nuclear accord reached under his predecessor Barack Obama in 2015, but he will not certify to the US Congress that Iran is in compliance under the Iran Nuclear Agreement Review Act of 2015, CBS News reported.

Analysts believe three weeks of straight losses suffered by equities were the market’s premature reaction to the potential political risks of Trump’s speech. And with the final announcement not being as catastrophic as expected, a rebound was expected on the back of a weakening rial and listed firms’ new H1 production data.

Metal and mining stocks are expected to further boost the market, as global prices’ outlook remains positive.

This is while Tehran’s markets were rocked by Trump’s election as the 45th president of the US back in November, forecasting doom and gloom based on his anti-Iran rhetoric. Shockwaves hit equities on November 10, with TEDPIX taking a 1.83% drive and IFB tumbling by 2.4%.

However, over 3.03 billion shares valued at $231.2 million were traded on TSE last week. The number of traded shares and trade value dropped by 8% and 12.7% respectively.

TSE’s First Market Index gained 983 points or 1.67% to end at 59,531.1. The Second Market Index rose by 842 points or 0.45% to close at 189,146.3.

At IFB, more than 1.34 billion securities valued at $195.7 million were traded. The number of traded shares and trade value shrank by 7% and 34% respectively.

IFB’s market cap gained $210.8 million or 0.8% to reach $27.82 billion.

Its First Market witnessed the trading of 77 million securities valued at $3.67 million, recording a 14% and 2% drop compared to the previous week respectively.

About 658 million securities valued at $38.27 million were traded in the Second Market with the number of traded shares and trade value growing 10% and 0.3% week-on-week respectively.

Over 5 million debt securities valued at $119.22 million were traded at IFB, dropping by 41% and 44% respectively.

The trading of exchange-traded funds also reached 34 million valued at $8.2 million to grow 18% in terms of the number of traded shares and shrink 32% in value.

> Mixed Week for Forex

The foreign exchange market had a mixed reaction to Trump’s remarks on Saturday. USD lost 0.49% against rial to drop to 39,970 on Oct. 21. However, the greenback changed course and continued to rally for the rest of the week to end at 40,170 rials, 0.04% lower than where it started.

The euro somehow followed the same pattern. It lost 1.25% on Saturday to sink to 47,250 rials, only to jump 1.79% the next day and reach 48,100 rials the following day. Yet the currency failed to maintain its momentum and slowly inched down to end the week 0.16% higher at 47,910.

Euro has gained 16.51% against rial so far this fiscal year (started March 21). The currency started soaring at the end of the first quarter (June 21).

The US dollar maintained a relatively balanced trend up until last month with slight upticks. However, the greenback started soaring against the rial on Sept. 23 to gain 3.82% and end at 40,410 rials on Oct. 10.

Just like equities, the spike was mostly due to the forex market’s frenzy over Trump’s threats to unravel the nuclear deal, which eventually cooled down and started dropping.

Overall, the USD has gained a total of 7.1% against rial to 40,170 rials since March 21.

> Capital Market’s 1st Currency ETF

The Iranian capital market’s first foreign currency ETF is expected to come on stream this week, the deputy head of Securities and Exchange Organization announced.

“One no longer needs to enter the physical forex market to invest in currencies. All that has to be done is buying shares in a foreign currency ETF, which will in turn track currency fluctuations and provide investors with returns on their investments,” Ali Saeedi was also quoted as saying by ILNA.

One aim of setting up currency ETFs, among others, may be to prevent shockwaves in the forex market in a supply deficit. That can be done by expanding their portfolio beyond only purchasing currencies by investing in export commodities and export-oriented firms that benefit from forex fluctuations.

Currency ETFs invest in a single currency or a basket of currencies with the aim of replicating movements of currencies by holding foreign exchange either directly or through currency-denominated short-term debt instruments.

The two currencies dominating the Iranian forex market are US dollar and euro. The former is the official currency used for Iranian transactions and the latter is the private sector’s currency of choice due to sanctions-related limitations on using the American currency.

Saeedi did not mention what currency or currencies the Iranian ETF will be denominated in.

The ETF is expected to fare well, considering the rising trajectory in many export-oriented stocks such as base metals on the back of growing commodity prices and an expectedly currency devaluation.

> 2 IPOs Last Week, 1 Block Sale This Week

A 29% stake in Iran’s largest steel exporter Khouzestan Steel Company is scheduled to be offered on Oct. 30, Iran Privatization Organization announced.

The stake is made up of 4.2 billion shares of “FKHZ” each priced at 4,466 rials with a total value of 18 trillion rials ($450 million), Bourse Press reported.

The privatization organization will undertake the block sale on behalf of Payandegan Investment, a subsidiary of Oil Industry Pension Fund, which controls a 49% stake in KSC. The investment company added KSC to its portfolio five years ago and has so far had trouble paying the installments to IPO.

Two companies also had their initial public offerings this week.

The first was East Azarbaijan Pegah Company, marking the capital market’s ninth IPO so far this year. The firm’s 20 million shares were offered on Monday in a range of 3,050-3,355 rials, the price of which was finally discovered at 3,355 rials.

The 10th IPO took place on Wednesday for the 7-trillion-rial ($175 million) South Kaveh Steel Company, which was listed on TSE last year but was unsuccessful in floating its shares.

Five percent or 350 million shares in “KVEH” offered at a price range of 1,740-1,760 rials were received favorably, with the final price at 1,760 rials per share.

This week’s two IPOs followed Asia Seir Aras Company, Iran & Shargh Leasing Company, Rishmac Company, HiWeb, Chador Sazan Company, Parsian Kowsar Hotel, MobinOne Kish and Behpardakht Mellat respectively.