Economy, Business And Markets

Iran Weekly Market Report

Iran Weekly Market Report
Iran Weekly Market Report

Tehran Stock Exchange had another flat week with low trade volume as the main index slipped by 0.2%, closing at 62,409.

Overall, the TSE All-Share Index has recorded a 1% decline during the last four weeks. The index declined by 0.3% during Sunday and Monday’s trading sessions, reaching 62,374 which is the lowest measure since mid-October. However, the minor recovery on Tuesday and Wednesday added 0.06% to the index’s value, to close at 62,409, the global online currency trading portal FXstreet reported in its latest edition of Iran Weekly Market Report.

According to its technical analysis, the main index of Tehran Stock Exchange has not experienced considerable changes compared with the previous week, due to the recent slight moves of the TEDPIX. This can also be seen in the TSE All-Share Index’s limited fluctuations, as the volatility index has reached new lows on the second week of December.

The TEDPIX’s current support level stands at 61,500, while the index needs to surpass the 63,000 level to be on the right track towards the next resistance level at 65,000.

Also, the index of the 30 largest companies by market capitalization, the TSE 30 Index, had a weak performance as it closed at 2,622, losing 0.5% compared to the previous week. The index has lost 3.45% of its value in the last four weeks, fluctuating around its lowest level in two years.

Due to the substantial share of commodity-based companies in the TSE 30 Index, lower global commodity prices and a weak future prospect have put the index under pressure.

Moreover, the Average Daily Trade Volume of the market dropped by 27% this week, reaching $22 million. Analysts believe that the low level of activity in the market is due to investors’ anticipation of news regarding the removal of sanctions, expected to take place in the coming weeks.

Meanwhile, the highest traded values were recorded by Mellat Bank, Parsian Bank and Saderat Bank, as their weekly trade volumes were reported at 4.1, 3.5 and 3.1 million dollars respectively.

Mellat Bank’s share price closed at 1,900 rials (approximately 5.25 cents), 2% lower than the previous week, while Parsian Bank’s share price slipped by 1% as it closed at 1,118 rials (approximately 3.1 cents). Saderat Bank’s share price added 0.4% as its close price stood at 860 rials (approximately 2.3 cents).

  Iran Fara Bourse

IFB’s all-share index lost 6.9 points or 1% compared to the previous trading week to settle at 683. More than 493 million securities valued at $163 million were traded in 71,000 transactions. Trade volume declined 19% while weekly trade value grew 13% compared to the previous week.

Furthermore, IFB’s market cap saw a 0.8% decline to end the week at $22.7 billion. The First Market recorded the trading of more than 92 million securities valued at over $11.5 million to register significant surge of 223% and 349% in volume and value respectively compared with the previous trading week.

The Second Market, however, did not fare so well, as it witnessed a 13% and 5% decline in weekly trade volume and value with 260 million securities valued at $26 million changing hands. The highest daily trade volume of the week was recorded for Tuesday, as 182.5 million shares were transacted. Furthermore, Wednesday witnessed the highest trade value of the week with $42.9 million worth of shares changing hands.

Hotels and restaurants, with a 31% share of market transactions, ranked first among top weekly gainers. Auto manufacturing and the banking sector ranked second and third with 10% and 9% respectively.

  Currency Market

The FX market witnessed higher fluctuations by the Iranian rial versus major foreign currencies. The Central Bank of Iran set the official rate of the US dollar at 30,105 rials, with no change compared to last week, while the free market rate of dollar-rial rose by 1%, reaching 36,216.

Also, the free market rate of the euro surged to its highest level in 50 days at 39,556 rials, recording a weekly growth of 2.1%. The CBI increased the official rate of euro-rial by 3.1%, quoted at 32,833.

On the other hand, the British pound sterling had a different experience, as CBI announced the official rate of pound-rial at 45,196, 0.5% lower than the previous week. The free market rate of the British pound slipped by 0.3%, reaching 54,950 rials.

  Fate of Interest Rates

Iran’s Money and Credit Council held a meeting on Tuesday at the CBI, as many expected a reduction in interest rates. However, these expectations were not met because this topic was not on the meeting’s agenda.

Due to a major drop in inflation rate in the past two years, there is currently a difference of around 10% between the inflation rate (standing at 10.1%) and interest rates on annual bank deposits (standing at 20%).

Members of the council have voiced their support for interest rates on bank deposits to be reduced as a result. Nevertheless, the banking industry seems reluctant to reduce the rates, as unregulated credit institutions have offered higher rates to depositors and grabbed a bigger market share.

Still, the Money and Credit Council has in its latest meeting demanded the CBI prepare a full report on interest rates for the next meeting so that a decision can be made in this regard.