Stocks staged a rebound on Saturday; however, an early rally evaporated by the end of trading, with the Tehran Stock Exchange (TSE)’s overall index stretching its losing streak.
According to TSE data, stocks waned and waned at Saturday close, with close to 58 percent of the listed companies underperforming to keep dragging down the benchmark and record another downbeat performance by the TSE’s gauge. The TEDPIX registered its fourth consecutive trading day in red.
The benchmark inched down 28.6 points or 0.04 percent to stand at 66,540.6. The first market index notched up 37 points or 0.08 percent. The second market index slipped 440.5 points or 0.33 percent to settle at 132,273.5. The free float index ticked up 22 points or 0.03 percent to 77,335.7. The industry index was down 71.4 points or 0.13 percent to 54,362.9, and the blue-chip index eked 6.1 points or 0.2 percent to end at 3,92.6.
The TSE is getting back to last year’s dismal trading days, with low trade volume and value underscoring that spooked investors are not interested to shore up their portfolios, nor are they willing to get rid of their shares while some of them are even below their intrinsic value. More than 356 million shares changed hands, valued at around $238 million.
Bandar Abbas Oil Refining Company eventually outperformed and topped the positive contributors to the benchmark. Esfahan Oil Refining Company and Bank Mellat, with close to 42 and 25 points, took the second and third place respectively.
Tamin Petroleum & Petrochemical Investment Company (TPPIC) with 31.27 points had the most negative impact on the TEDPIX. Mapna Group, and National Iranian Copper Industries Company followed the TPPIC.
Low PE Ratio Lures Fund Managers
The average Price Earnings (P/E) ratio in Iran equity market reached around 5.5, indicating that a hoard of securities have hit their rock-bottom values, which can persuade fund managers to bring in their cash to the equity market.
The TSE is one of the most lucrative stock markets among emerging markets in the world, said Mohammd Khanzadeh, a market analyst. “Once the sanctions are lifted, international fund managers will lineup to enjoy tremendous opportunities of Iran’s untapped market.”
He also noted that the required infrastructures along with processed data are being prepared in advance of the post-sanctions era, adding that “international auditing standards is one of the important factors that should be considered as well”.
Many fund managers have already visited Iran, or are scheduling to explore Iran’s equity market in a bid to gear up to flock into the market, once the gates are open.
It is evident that investors’ dented sentiment, along with uncertainty about the prospect of economic growth in the long-run has drastically weighed on the TSE’s benchmark; however, as most market analysts believe, stocks with highest return on investment and biggest dividend yields do exist, and once Iran and the P5+1 clinch a nuclear accord, the equity market will be given a substantial boost.
Stocks are not overpriced, and overleveraged, so the stock market is not expected to extend the current losing streak, which is merely due to the lingering systematic risks surrounding the market. Hence, apart from unsettled investors and companies’ performance, no concrete factors is posing risks to the equity market.
