Iran's main stock index ended Wednesday's session close to a resistance level that it has held for close to four months, boosted by continued gains for the biggest commodity shares.
The TEDPIX Index on Tehran Stock Exchange advanced for a fifth straight session, extending its winning streak on Wednesday. The benchmark index grew 1,205.84 points or 0.72% to close at 169,115.5 points. The market crossed the 170,000 threshold last November.
Among the giants that had the main positive impact on TSE were Mobarakeh Steel Company, Bank Mellat, Tamin Petroleum& Petrochemical Investment Company and Pardis Petrochemical Company.
Industrial and Mineral Investment Company had the biggest rise on Wednesday at 5.97% to reach 1,296 rials.
Among the main reasons for the rally cited by Donyaye Boourse website were robust activity in global markets, boom in commodity prices, trade on Iran Mercantile Exchange and speculations that the government might be on the verge of unifying the multiple exchange rates.
On the other hand as the fiscal year comes to a close (on March 20) some investors seem to be more inclined toward selling shares.
This comes at a time when world shares slipped on Wednesday after two days of gains amid mounting concern over world growth and trade, though the British pound rallied half a percent on optimism that lawmakers were set to rule out a no-deal Brexit.
Among the main reasons for the rally were robust activity in global markets, better commodity prices, trade on Iran Mercantile Exchange and speculations that the Tehran government may be on the verge of unifying the controversial multiple currency rates
European shares opened flat to weaker, unable to shake off the somber mood in Asian trading. Last week’s optimism over US-China trade talks has faded after US Trade Representative Robert Lighthizer said it was unclear whether gaps between the two sides could be closed.
But Reuters reported markets are still hopeful about a US-China trade deal.
Banks Doing Better
Bank shares also had a good time at TSE on Wednesday as investors reckon that doing away with the controversial subsidized currency policy will boost bank assets when they are valued at free market rates.
Governor of the Central Bank of Iran Abdolnaser Hemmati last week spoke about the gross inefficiency of the forex subsidy programs for importing essential goods, which he squarely blamed on the dysfunctional currency distribution system.
Last year the government decided to fix the USD rate at 42,000 rials, on the promise that it can meet all currency needs at that rate, ignoring the advice of economists and private businesses that imposing currency is indeed an exercise in futility.
However as demand for subsidized forex (at rates way lower the open market rates) shot up overnight, the government panicked only to admit that its latest forex move could not deliver.
The government created different categories of goods that would be eligible for subsidized currency. One list included import of 25 basic goods that could get currency at preferential rates, another was for imports at the newly created rate called Nima. Importers of all unessential consumer goods were told to refer to the free market for their currency needs.
Considering the fact that the subsidy scheme did almost nothing to prevent price shocks for even staples like meat and oil, there now is a growing consensus that a revision is necessary sooner rather than later.
In an Instagram post, Hemmati admitted that because of shortcomings in the forex distribution network and oversight weakness the policy had failed to curb rising prices of most essential goods.
Economy Minister Farhad Dejpasand became the latest official on Tuesday who admitted that the subsidized forex policy for all practical purposes had failed.
