Economy, Business And Markets

Iran Weekly Market Report

Iran Weekly Market ReportIran Weekly Market Report

Tehran Stock Exchange’s main index closed at 62,871 at the end of Wednesday’s trading session, recording a 0.3% decline compared to the previous week.

The TSE All-Share Index TEDPIX slipped below the 63,000 level to record its lowest measure in November 2015.

On the third trading week of the month, TSE’s major sectors had poor performances as the Automotive and Oil Products Industries decreased by 4% and 2.2% respectively, global online currency trading portal FXstreet reported in its latest edition of Iran Weekly Market Report.

The Banking Sector also slipped by 1.2%, while Non-Metallic Ores and Transportations & Logistics had the highest growth among major sectors, increasing by 2.9% and 2.7.

Low fluctuations of the TEDPIX dragged volatility to the lowest levels since January 2014. Compared to the previous week, the volatility level of the main index has declined by 50% in the trading week ending on November 19.

The limited fluctuations of the index have kept technical analysis prospect stable. However, the 50-day EMA reduced its gap with the All-Share Index to 0.5%, as the index’s daily changes have been less than 1% in the last 19 trading sessions.

Also, the index of 30 largest companies by market capitalization, the TSE 30 Index, recorded negative returns on all trading sessions of the week. The TSE 30 index slipped by 1.2% on a weekly basis as it closed at 2,680, going below the 2,700 level for the first time since mid-October 2015.

Similarly, the Average Daily Trade Volume of the market stood at $23.5 million, 5.6% lower than the previous week. The ADTV measure has already dropped by almost 24% in two weeks, reaching its lowest level since October 2015. This is also reflected in the total traded values of the market’s top three value leaders.

Bank Mellat, Iran Polyacryl and Iran Khodro had the highest total traded values this week with 6.3, 5.8 and 3.5 million dollars of trades. The share price of Bank Mellat closed at 1,935 rials (approximately 5.4 cents), 1.8% lower than the previous week. But Iran Polyacryl surged by 16% on a weekly basis as its share price closed at 2,756 rials (approximately 7.7 cents). This is while Iran Khodro fell from its two-month high of 2,075 rials, recorded on November 11, as it closed at 1,897 rials (approximately 5.3 cents) falling by 8.5%.

  Iran Fara Bourse

Iran Fara Bourse’s overall index shed 4.2 points or 0.6% during the same week compared to the previous trading week to end at 702.

According to IFB, more than 994 million securities were traded in 64,000 transactions valued at $135.7 million. Trade volume registered a 37% growth while weekly trade value declined by 31% compared to the previous week.

IFB’s market cap shrank 0.3% to end the week at $22.9 billion. The First Market registered the trading of close to 60 million securities valued at $5.3 million to record 34% and 35% jump in volume and value compared to the previous trading week.

The Second Market witnessed a 16% and 3% increase in weekly trade volume and value with the transaction of 258 million securities valued at $20.9 million. Oil products with a 15% share of the market transactions topped the charts among weekly gainers, while base metals and chemicals took the next spots with 11% and 9% respectively.

  Currency Exchange

Furthermore, the Iranian rial depreciated against the US dollar and the British pound this week.

The Central Bank of Iran set the official rate of dollar-rial at 29,967, 3 rials higher than the previous week, while the free market US dollar rate recorded a 0.5% increase, reaching 35,597 rials. However, the euro had a weak performance against the Iranian rial as the official rate of the euro was announced at 32,092 rials, marking a 0.5% decline.

Also, the free market euro-rial slipped by 0.3%, where it ended up at 38,284 on Thursday afternoon. The official rate of the pound sterling experienced a 0.4% gain, as the CBI set it at 45,811 rials. Similarly the pound-rial free market rate rose by 0.8%, standing at 54,550.

  Interest Rates

In contrast with an agreement announced last week, where banks had stated they would reduce interest rates on annual deposits by 2%, (going down from 20% to 18%), some banks’ executives raised doubts on whether this plan will indeed be implemented on November 22.

In a setback to statements made last week, the executives mentioned that the reduction of interest rates should be decided by the Iranian Money & Credit Council.

Governor of the Central Bank of Iran Valiollah Seif and Minister of Finance and Economic Affairs Ali Tayyebnia have both stated the necessity of reducing interest rates due to a sharp drop in the country’s inflation rate (decreasing from 45% to 10.8% in two years).

However, based on the latest comments made by officials, it is uncertain whether the Money and Credit Council will decide on interest rates in its meeting scheduled to be held this week.

Speaking at a conference in Tehran, Tayyebnia argued that some preparations are needed before an interest rate reduction can be implemented.

Some experts believe that a cut in interest rates can benefit unregulated credit institutions, if they do not abide by new interest rate policies. As these institutions are not under the supervision of the central bank, they can offer higher interest rates on deposits, therefore skewing the market share of deposits in their favor. This could potentially have an adverse effect on the banking sector and the economy.

  Stimulus Package

The implementation of the government’s economic stimulus package plan initiated last week was partially stopped due to a large unanticipated participation by the public.

A part of the plan involved the provision of consumer loans to the public for the purpose of purchasing Iranian manufactured or assembled automobiles. As the number of cars sold surpassed 110,000, the plan was halted at the behest of the CBI.

Iran Khodro, the largest car manufacturer in the Middle East and North Africa region, sold over 65,000 cars during the one week period when the plan was implemented. These sales can increase the company’s annual sales prospect by approximately 13%.