Tehran Stock Exchange is grappling with irregular downbeat performance of listed companies, with the overall index extending its losing streak to a sixth consecutive trading day registering a 1.83% retreat.
All-embracing uncertainties in each sector both in the long and short run along with the prevailing credit crunch are dramatically weighing on investors’ sentiment.
In a bid to hedge their bets, investors are opting for less risky investments. Iran’s capital market lacks diversified investment instruments. Adding to the stress, lack of financial instruments to mitigate lingering risks is also pushing the equity market further into red.
Almost all market analysts indicate that once sanctions over Iran’s nuclear program are lifted, and required legal frameworks and infrastructure will be ready to serve foreign investors, foreign investors will flock to Iran’s market. Although sanctions are scheduled to be lifted by early 2016, cautious investors prefer to stand aside until then.
According to TSE data, TEDPIX lost 74.4 points or 0.11% to close at 65,239.9. The Price Index slid 29.5 points or 0.11% to 25,855.6. The First Market Index slipped 126.5 points or 0.27% to settle at 46,299.3. The Second Market Index, as the only positive contributor to TSE gauge, gained 246.7 points or 0.18% to stand at 139,166.7. The Industry Index was off 66.1 points or 0.12% to 53,746.5. The Free Float Index fell 80.42 points or 0.11% to 73,831.9. The TSE 30 Index pulled back 7.8 points or 0.27% to 2,883 and the TSE 50 Index also retreated 2.6 points or 0.1% to end at 2,672.
More than 732 million shares changed hands valued at $28.73 million to post around 90% increase in daily trade volume and 10% decrease in trade value compared to Saturday.
Close to 58% of listed companies underperformed with oil and petrochemical companies on top. Isfahan Oil Refining Company with -47 points stretched its negative contribution to TEDPIX and surpassed market laggards. Mapna Group and Parsian Oil and Gas Development Company came next in line.
Tamin Petroleum & Petrochemical Investment Company with an average PE ratio of 5 and 30.28 points provided the biggest boost to the benchmark. Islamic Republic of Iran Shipping Lines and Bank Ansar with 23 and 15 points took the second and third place respectively.
Prospect of FDI in Equity Market
Speculations about foreign direct investment in the equity market started after the preliminary nuclear deal between Iran and P5+1 on April 4. The accelerating trend of trading codes issued for foreigners ever since points to the low-profile presence of overseas investors at Iran’s capital market.
Almost 50 trading codes have been issued for foreigners to trade at Iran’s equity market since March 21, of which 12 codes were issued in July alone, SENA reported.
Investors’ interest to get into Iran’s fast emerging market has been on the rise since last year. More than 120 codes have been issued for investors during the year ending March 20, 2015 for investors from the UK, Russia, Switzerland, Germany, Pakistan, China, India, Turkey, Malaysia, Lebanon, Afghanistan, the UAE, Greece, Hong Kong, Iraq, South Africa, Norway, Syria and Kuwait, of which 25 codes were filed for Iranian expatriates, which is unprecedented in Iran.
Currently 330 retail investors along with 30 institutional investors from other countries, including 50 Iranian expatriates, are engaged in Iran’s equity market.
Oil, gas, steel, banking, shipping lines and telecommunications are among leading sectors with tremendous investment opportunities.
The equity market’s lowest average PE ratio of 5.5 compared with the average ratio of 16 in other regional countries underscore the hidden potential of Iran’s stock market.
