Tehran Stock Exchange (TSE)’s overall index rallied at Monday’s close to end a 6-day rout, after the banking sector outperformed to pare part of its massive losses incurred within the past few months.
The stocks sluggish uptrend pushed the benchmark to rise 94.7 points or 0.15 percent to trigger a change at the equity market’s dented sentiment.
The TSE’s gauge has been shedding within the past few months, amid falling oil prices, and sagging global economy, however, a set of policies including block offerings has managed to briefly lift the benchmark.
According to TSE data, the TEDPIX rose 94.7 points or 0.15 percent to 63,954.8. The first market index gained 115.7 points or 0.24 percent to end at 47,410.7. The second market index slipped 116.7 points or 0.09 percent to settle at 123,825.3. The free float index notched higher 220.4 points or 0.3 percent to settle at 73,046. The industry index also was up 11.2 points or 0.02 percent to stand at 53,479, and the blue-chip index edged up 4.6 points or 0.16 percent to finish at 2,858.
Trade volume recorded close to 20 percent rise, with almost 776 million shares changing hands, valued at about 1.04 trillion rials.
Investors lined up to garner devalued shares of Saderat Bank, which was entitled Monday’s safe haven, and leading contributor to the TEDPIX uptrend. Tose’e Melli Investment Company and Saipa Group took the second and third place respectively.
Parsian Oil and Gas Development Company, Persian Gulf Petrochemical Industry Company, and Mobile Telecommunication Company of Iran were market laggards, as they weighed on the TEDPIX and trimmed part of gains by the end of trading hours.
Fund Managers En Route to Iran
Growing optimism that international trade sanctions on Iran will soon be lifted has resulted in dozens of fund managers visiting the country to study Iranian companies, the Financial Times reported.
Investors in frontier markets believe Iran can become a more developed market once it opens up to foreign investment.
Dominic Bokor-Ingram, portfolio adviser at Charlemagne Capital, the London-based emerging markets specialist, says: “A breakthrough on sanctions could provide one of the most interesting investment opportunities we have seen for a very long time.”
Bokor-Ingram visited Tehran twice in the past 12 months to meet companies in which he might invest if sanctions imposed on Iran over its nuclear energy program are removed. Sam Vecht, the manager of the BlackRock Frontiers Investment Trust, is also planning to visit Iran.
“It (Iran) has a strong middle class and an active stock market,” says Vecht.
Michael Levy, investment manager of the Baring Frontier Markets fund, says: “Iran displays many of the characteristics we look for when investing in frontier markets, such as a young population and rising demand for consumer goods and healthcare.”
With a market capitalization of $106 billion, about 500 listed companies and daily trading of $80m-$100m, the TSE is about the same size as Dubai Financial Market (DFM). It is currently trading at about 5.5 times earnings, against 10.5 times for the MSCI Frontier Markets index, and provides dividends in the low teens.
The MSCI Frontier Market Indexes include large, mid and small cap representation and cover approximately 99% of the investable equity universe across all Frontier Markets countries.
Should sanctions be lifted, Iran could increase its daily oil exports from 1 million barrels to 3.5 million barrels a day, which would provide an immediate economic boost, believes Bokor-Ingram.
“Iran has one of the highest oil and gas reserves of any country in the world, but overall its economy is not nearly as dependent on oil and gas as its peers in the Middle East,” he remarked.
Charles Robertson, chief economist at Renaissance Capital investment bank says: “Iran is, surprisingly, the most diversified economy in the world. It exports every item in the International Monetary Fund (IMF) classification of exports. Its agricultural and manufacturing base may be more competitive if energy prices are low and the currency therefore is relatively cheap.”
Despite these obstacles, both emerging and frontier market managers are expected to move rapidly once sanctions end, although it would take time for indices such as the MSCI Frontier Markets index to be added to Iran’s equity market
