Economy, Business And Markets

Stocks Rally Amid Dovish Signals From Nuclear Talks

Stocks Rally Amid Dovish Signals From Nuclear TalksStocks Rally Amid Dovish Signals From Nuclear Talks

A fresh bullish sentiment at the Tehran Stock Exchange (TSE) over optimistic speculations about the ongoing nuclear talks led to the benchmark experiencing a three-month record high at Saturday's close to recover a small part of the massive losses which occurred following the extension of nuclear talks in late 2014.

Once again, upbeat news on the nuclear talks between Iran and the P5+1 group triggered lineups for the leveraged companies' shares at the equity market, with petrochemical, banking, automotive and communication sectors leading the gains.

Shares at rock-bottom values grabbed the attention of investors, leading to massive lineups on Saturday over the latest positive developments on nuclear talks, despite prevailing ambiguities over the tumbling oil prices, fears of a looming budget deficit, western sanctions, and global slowdown, to underscore the equity market's potential.                   

US Secretary of State John Kerry told Republicans who control the Congress on Wednesday that they would not be able to modify any nuclear agreement struck between the United States and Iran, Reuters reported. Kerry said he responded with “utter disbelief” to an open letter to Iran on Monday signed only by Republican senators that said any deal would only last as long as US President Barack Obama, a Democrat, remains in office.

According to TSE data, the overall index rose 539.6 points or 0.84 percent to settle at 64,610.3. The first market index gained 231.9 points or 0.49 percent to end at 47,676.5. The second market index soared 2,155.5 points or 1.73 percent to reach at 126,548.5. The free float index climbed 708.7 points or 0.97 percent to stand at 73,620.2. The industry index was up 283.1 points or 0.53 percent to reach at 53,895.5, and the blue-chip index picked up 23.5 points or 0.82 percent to 2,887.5.

Despite more than 100 percent growth in trade value, the mere 30 percent growth in trade volume illustrated that veteran investors are still skeptical about bringing their cash to the equity market, eying the latest developments carefully to make sure a persisting bullish trend is underway.

More than 880 million shares changed hands, valued at close to 2.8 trillion rials, though many investors remained in the queue, having failed to garner shares.

Persian Gulf Petrochemical Industry Company had a stellar trading day with almost 123 points in positive contribution to the benchmark. Tamin Petroleum & Petrochemical Investment Company and Mellat Bank took the second and third place among outperformers with almost 74 and 64 points contribution respectively.

Khuzestan Steel Company (KSC) was the most crucial market laggard with the Price Earnings (P/E) of 2.7 and close to 104 points in negative contribution.  Mobarakeh Steel Company followed KSC with a P/E of 4.2 and 32 points downbeat performance, as Golgohar Mining and Industrial Company took the third place.

Fund managers and investors are preparing to flock into Iranian markets, which is considered as an untapped market, with many opportunities to attract foreign investment.

With a market capitalization of $106 billion, about 500 listed companies and daily trading of $80 million to $100 million, the Tehran Stock Exchange is about the same size as that of Dubai.

Iran’s benchmark stock index has slumped about 18.5 percent since the beginning of the current Iranian year, which ends March 20, after soaring 130 percent last year to a record high, beating the returns posted by the 93 major global equity gauges tracked by Bloomberg.

The fundamentals of the Iranian economy look as attractive as any emerging market, and arguably more so. Iran has a population of 78 million, about the same as Turkey, and more than any of the emerging economies of Eastern Europe. At $437 billion, it is the 27th largest economy in the world, roughly similar to Argentina and Taiwan, and ahead of Austria or Thailand.

There is no doubt that a comprehensive nuclear accord can stimulate economic growth in a country that enjoys a variety of natural resources, a strategic geographical location, and many dynamic industries at its equity market, with potential to boom.