New inflows of money headed into the equity market accompanied by a breathtaking leap in trade value at the Tehran Stock Exchange (TSE), after the recent bullish trend amid prospects of a more promising economy.
Around 9.5 billion shares, valued $569 million changed hands within the week that ended April 8, which led to 153 and 190.5 percent growth in trade volume and value respectively, to underscore the fact that the overall index is set to keep notching new highs.
The TSE’s benchmark roared back after the only downward trading day on Tuesday, to wrap up the week with 4,975 points or 7.54 percent up compared with the prior week, and settle at 70,685, TSE reported.
All indices piled up more gains and all of them recorded fresh gains in comparison with the previous trading week. The first market index rose 4,033 points or 8.4 percent to end at 52,027. The second market index with 7,279 points or 5.51 outperformed and reached 139,312.
Telecommunication, warehousing and transportation, each with a 20.69 percent; engineering services with up to 14.4 percent, petroleum products with 14.14, and financial sector with almost 12.8 percent were the most lucrative industries in the spot light at Iran’s equity market.
The equity market is attracting fresh inflows with more individual investors tapping into the stocks in a bid to hedge their bets amid an unprecedented jump in the equity market.
Both individual and institutional investors are flocking into the equity market as it has turned into a safe haven in comparison with parallel markets in Iran. This is while the currency market was previously fluctuating – mostly downward – to make investors mull over turning to other markets. Moreover, the recent speculations on lower interest rates are expected to help the equity market to reinvigorate. The property sector, which has always been considered as high-yielding for investors, is still grappling with a massive slump due to the global slowdown, and sagging steel industry.
Tentative Deal
The TSE’s new record highs come as a decade-long standoff between Iran and the P5+1 regarding Iran’s nuclear energy program seems to be resolving; however different interpretations about the deal may spook investors.
Only days after Iran and six major powers reached a framework agreement, the European Union re-imposed sanctions on an Iranian bank and 32 Iranian shipping companies on Wednesday, after the measures were struck down by a European court, Reuters reported. The EU’s move is a signal that the 28-nation bloc will keep up sanctions pressure on Iran until a final nuclear deal is sealed.
The EU’s second-highest court annulled an EU asset freeze on Bank Tejarat and 40 Iranian shipping companies in January, finding fault with the legal grounds given by the EU.
The skeptical investors may selloff Bank Tejarat and Islamic Republic of Iran Shipping Line shares following the recent sanctions; however, the banking sector and shipping line industry are among the most high-yielding ones as soon as the western sanctions are lifted, and hence, it is less likely to witness selloffs in the mentioned sectors, analysts believe, labeling the recent move by the EU court as a political showoff.
Farabourse Market Cap on Surge
Iran Farabourse or over-the-counter market cap reached around $29.87 billion, with the latest Initial Public Offering (IPO) of Hormozgan Steel Company enticing many individual investors to bring inflows into the Iran Farabourse, SENA reported. “Iran Farabourse market cap with a fresh inflow of $548.7 million amid the recent IPO, surged to $29.87 billion, with more than 750 million shares of the HSC changing hands. The Iran Farabourse reportedly indicated that the coming IPOs will be launched in accordance to the market status.
Furthermore, the Iran Farabourse index (IFX) soared 10.6 percent over the past week, with close to 3.84 billion shares changing hands, valued at $263 million to record 526 and 174 percent surge in trade volume and value respectively.
