Tehran Stock Exchange 9-Month Return at 62% (Mar-Dec 2018)

EghtesadOnline: Tehran Stock Exchange closed the first nine months of the current fiscal to December 19 with a return of 62% on investment, which makes it one of the top-performing economic sectors.

News ID: ۷۸۴۴۱۷

23 December 2018

The main index (TEDPIX) surpassed the support level of 160,000 points in the first half of the current fiscal, registering 66% return on investment, an indication of the increasing appeal of the market to investors.

A review of the stock exchange trade in autumn indicates changing trends and shift of attitude in different time periods.

According to the Securities and Stock News Agency, TEDPIX stood at 157,000 points on the last day of summer (Sept.22). The figure dropped to 156,000 points on the last trading day of autumn, witnessing a subtle loss of 0.8% during the three-month period, Financial Tribune reported.

The average value of traded shares at TSE followed a downward trend in autumn.  The average value of overall trading dropped from 15 trillion rials ($147 million) in summer (June - Sept) to half at 8 trillion rials ($70.1 million) in autumn.

Retail investors who dominated the summer market adopted a more cautious position in autumn and were  mainly focused on selling. Instead, institutions and legal entities took their place in the market, particularly in the second and third months of autumn, and emerged as  major players.

Also, with regard to the performance of industries, investors were looking for small industries in the TSE. The key agriculture industry ranked on top with 38.5% return.

The first month of autumn (Sept.22 Oct.22) bode well  for TSE shareholders. The surge in demand during this period outstripped supply and TEDPIX registered a return of above 17%. In the mean time, foreign currencies and gold pared some of their earlier gains after a long time to register negative returns.

In the starting days of the first month of autumn, the flow of liquidity into stock market gained pace and resistance levels were broken in several cases, sending TEDPIX to its highest records. The jumps broke several levels in one day.

The value of daily trade witnessed a steep rise and exceeded 15 trillion rials ($147 million). Also, TEDPIX was at the support level of 187,800 points this month and registered 95% return since the beginning of the year.

This is while the second month of autumn witnessed the changing attitude of shareholders and a shift in trading trends. The Iranian month Aban (Octob.23-Nov. 21) was undoubtedly an eventful month both in the economic and political sense.

Price Corrections

Shareholders began to retreat from the buy side in light of systematic risks which caused TEDPIX to fall 6% in this period.

It must be mentioned that market analysts had earlier warned about the price correction process after a spree of heavy rises. Therefore, the underperformance of some indexes in the second month of autumn can be partly attributed to the price corrections for most shares.

The highest monthly loss was recorded in Azar - the third month of autumn - in which the TEDPIX lost 11% and fell into the support level of 156,000 points influenced mostly by global market trends.

Needless to say, the role of jittery investors influenced by the herd behavior of the market should not be ignored.

At the end of Aban, real entities and retail investors that had injected large sums of liquidity into the capital market in the first seven months of the year swapped their place with large companies and institutions before winter arrived.

On the other side, legal entities were active buying within this period. As major players who had the upper hand in the capital market, they mainly supported metal, mining and the petrochemical industries plus banks.

Eye on Global Markets

Given the fact that export-based goods and commodities account for almost half of the stock market in Iran, it is important for investors to follow the trends in global markets and choose their own market strategies accordingly.

Among other things, TSE’s performance in the autumn took influence from speculations over the fate of Iran’s crude oil exports after the re-imposition of US sanctions.

Additionally, despite the trade truce between US and China, commodity prices have not yet returned to the growth track.

The US unilateral decision to pull out of the Iran nuclear deal challenged global markets with a shortage of crude  oil and lifted prices for some time. The surge continued until the US Treasury retreated from its hostile stance  and gave waivers to 8 buyers of Iranian oil, allowing them to buy from Iran for another 180 days. The waivers lowered oil prices to $54 a barrel -- almost half the $100 international oil experts had expected in the absence of waivers.