TSE Records All-Time High Monthly Growth

EghtesadOnline: The last Iranian month (ended Aug. 22) was replete with good news for the stock market, as Tehran Stock Exchange's main index, TEDPIX, rose to the unprecedented height of 136,960.6, registering a record monthly growth of 25.8%.

News ID: ۷۸۳۷۷۱

26 August 2018

Iran Fara Bourse's main index, IFX, gained 331.27 points or 27.1% to close the month at a record high of 1,553.27.

During the period, the stock market showed significant reactions to developments in Iran's currency and commodity markets. Recent shocks to the economy have made forecasting and analysis difficult, and news are the only cues to follow.

A Week to Remember

The bullish rise in the indices started in the opening week of the month, as investors were invigorated by the change in leadership at the Central Bank of Iran. The new governor, Abdolnasser Hemmati, announced a brand new forex plan to relegate the concerns facing the market, according to Financial Tribune.

The package was expected to take the Secondary Forex Market as the official price reference, with petrochemicals and steel firms’ hard currency revenues offered to importers at a negotiated price.

Money and Credit Council announced that the 42,000 rials to the US dollar was to be allocated only to essential goods, including medicines, according to reports published at the beginning of the month.

However, speculations prompted a rush by investors to inject their capital into the stock market, hence the 13.92% rise in TEDPIX and the 16% jump of IFX registered in the week ending Aug. 1.

Both exchanges set records in weekly growth, as well as daily growth (July 31), with TEDPIX closing at 123,951.3 points and IFX registering a final 1,428.5 points.

Hopes and Fears Abound

The solid gains went on well into the second week of the month, as records were broken yet again on Aug. 6.

TEDPIX grew 4% in one day to register both its highest-ever daily growth and new historic high. IFX followed suit, jumping 3.6% to reach a new all-time high for the second time in two weeks.

Trade at TSE also broke a record the same day, as 3.66 billion shares worth $342 million were traded, bringing its market capitalization to the never-before-seen peak of $111.5 billion.

The record-breaking trade was in no small part due to CBI's announcement that the secondary market would be launched on Aug. 7.

But after the hype died down, the closing days of the trading week did not see any significant rise in the indices, with index levels bleeding on Wednesday for the first time in the month to register a 1.54% decline in TEDPIX and a 2.12% decrease in IFX.

The other reason for the downturn was the lasting ambiguity in petrochemical feedstock pricing and enforced metal rates set at Iran Mercantile Exchange, causing the biggest winners of the preceding days, i.e., petrochems and base metal producers, to give up some of their gains. Although the uncertainty was nothing new and it seemed to have gained precedence, as the good forex news died down.

Although it had both good days and bad days, the third week of the month had little to offer investors, with TSE registering a 0.8% weekly decline and IFX barely gaining 0.1%.

The insistence of the government offering metal and petrochemical products at IME using the subsidized exchange rate together with the ongoing uncertainty in petrochem feedstock pricing and the all-out US-China trade war causing base metals to bleed money on a global scale, rendered investors reluctant to trade in the stocks market.

A Retracted Decision

The trade went booming on Aug. 19-20 as the Securities and Exchange High Council announced its decision to finally end the offering of steel and petrochem commodities at the government-enforced pricing of 42,000 rials per dollar at IME.

The council is the main authority on exchange markets and is headed by the minister of economic affairs and finance.

The council's announcement naturally caused investors to jump on base metal and petrochem shares, Donya-e-Bourse reported.

However, on Tuesday, the decision came undone and the products were yet again offered at the subsidized rate. Stocks became stagnant once again, with TEDPIX registering 162 negative points or 0.12% on the closing day of the month, and IFX remaining roughly the same it was the day before, giving up 0.1%, or 1.55 points compared to Monday.

> Monthly Trade in Detail

Over 37.09 billion shares valued at $1.27 billion were traded on TSE during last month, registering an 11.91% and 41.39% growth in the number of traded shares and trade value respectively compared to the month before.

TSE’s First Market Index gained 22,305 points or 28.41% to end at 100,804. The Second Market Index, followed suit, gaining 49,212 points or 21.8% to close at 273,961.

And at IFB, over 13.7 billion securities valued at $966.10 million were traded during the month, growing 152% and 209% in the number of shares traded and trade value respectively.

IFB’s market cap gained $1.97 billion or 10% to reach $18.69 billion.

Its First Market witnessed the trading of 2.8 billion securities valued at $70.33 million, rising 64.7% and 95.6% respectively month-on-month.

About 6.63 billion securities valued at $223.70 million were traded in the Second Market, registering an increase of 17.34% in volume and 70.85% in value.

Over 61 million debt securities valued at $549.17 million were also traded at IFB, up 60% and 52% in trade volume and value respectively.

Exchange-traded funds stood at 250 million worth $41.86 million, up 3% and 8% respectively.

Housing mortgage rights’ trade grew 0.5% in trade volume and fell 3% in value to reach 1.94 million securities worth $13.61 million.