Tehran Stocks Brake on Growth

EghtesadOnline: After two weeks of uninterrupted gains, Tehran stocks stopped last week to catch their breath. Tehran Stock Exchange and Iran Fara Bourse followed similar losing trends for most of the week, but ended up closing slightly higher.

News ID: ۷۸۲۸۰۶

03 June 2018

Tehran Stock Exchange’s all-share index, TEDPIX, gained 133 points or 0.1% during the week that ended on March 30 to close at 95,577.7.

Iran Fara Bourse’s benchmark index, IFX, gained 3.3 points or 0.3% to stand at 1,110.3.

With the United States virtually out of the 2015 Iran nuclear deal, traders simply had one less market ambiguity to deal with, according to Financial Tribune.

US President Donald Trump announced last month that his administration was pulling out of the deal, officially known as the Joint Comprehensive Plan of Action, and bringing back sanctions on key parts of Iranian economy on Aug. 6 and Nov. 4.

With their worst fears having a date tagged to them, investors could focus on actual market fundamentals and factors directly affecting them, such as the single-rate currency exchange regime.

The government ended years of dual-rate currency exchange regime in early April and pegged rial to 42,000 per USD. The Central Bank of Iran has slightly edged up the rate in recent weeks to 42,150, yet the official rate is still about 30% below the unofficial rate traded in the black market, the Persian daily Donya-e-Eqtesad reported.

This directly affects most Tehran stocks, with the biggest being exporters such as petrochemical and base metal producers. Smaller exporters may be able to fly under the government’s radar and sell their USD at black market rates, but big names have to bring their cash to the government.

Preliminary performance reports are already out, but more detailed financial reports are required to detect the 42,000-rial per USD’s impact on earnings.

As it stands, some metal producers’ reports, such as zinc exporters, indicate a USD conversion of around 50,000 rials. The transactions are isolated, however, and it remains to be seen whether petrochemicals, too, can skirt around CBI enforcements.

Gold Coin Surges, Euro Lags Behind

Euro and gold coin gained last week.

For the benchmark Bahar Azadi gold coin, the week’s trend was very much bullish. Overall, it gained 9.16% to reach 20.8 million rials by the end of the week, only 50,000 rials lower than the all-time record reached on Wednesday. The coin is also up 32.48% since the beginning of the fiscal year (March 21).

Euro, too, was up. Rial lost 1.22% during the week to euro to hit 75,200, according to data by Tehran Gold and Jewelry Union.

The European currency has gained 28.85% so far this year.

IME Launches Saffron Futures Trading

Iran Mercantile Exchange launched the first-ever saffron futures trading on Wednesday. The move brought new incentives to the derivatives market with a new lucrative underlying asset.

The futures’ expiration date was set for Sept. 11, with each contract having 100 grams of premium saffron as its underlying asset with a 3% daily fluctuation cap on its price.

According to IME data, 6,309 contracts under the ticker “SAFSH97” were sold valued at a total of 43.97 billion rials ($1.04 million).

Iran is the world’s biggest saffron producer and accounts for more than 90% of the global production. The country produces over 300 tons of saffron per year with a per capita consumption of 1 gram.

The IME initiative is primarily aimed at helping the precious commodity’s pricing transparency and discovery, considering that IME trading will cut off the middlemen and directly connect the farmers with buyers.

If received favorably, the increasing presence of saffron at IME can bode well for producers and lessen or eliminate many of the limitations, especially if the red gold can make it to IME’s export floor in the future.

Weekly Trade in Detail

Over 6.55 billion shares valued at $346.3 million were traded on TSE last week. The number of traded shares inched up 4% while trade value plummeted by 52% compared to the week before.

TSE’s First Market Index gained 709 points or 1% to end at 68,680.3. The Second Market Index dropped by 3,027 points or 1.5% to close at 199,312.7.

And at IFB, over 1.5 billion securities valued at $269.8 million were traded, with the number of traded shares growing by 16% and trade value dropping 6% compared to the previous week.

IFB’s market cap lost $32.4 million or 0.09% to reach $36.49 billion. The cap has grown 4.26% so far this fiscal year (March 2017-18).

Its First Market witnessed the trading of 141 million securities valued at $4.8 million, indicating a 21% and 23% uptick in the number of shares traded and trade value.

About 677 million securities valued at $38 million were traded in the Second Market. The number of traded securities and trade value grew by 15% and 20% respectively week-on-week.

Over 8 million debt securities valued at $172.8 million were also traded at IFB, dropping 14% in the number of bonds traded and 16% in their value respectively.

Exchange-traded funds were down 1% in trade number and up 6% in value to reach 45 million worth $16.3 million.

Housing mortgage rights’ trade, on the other hand, reached 60,000 securities worth $8.9 million, marking a 30% and 29% growth on both counts respectively.