Economy, Business And Markets

Stellar Trading Week at TSE

Stellar Trading Week at TSE
Stellar Trading Week at TSE

T he Tehran Stock Exchange (TSE) had a spectacular trading week, in the seven days that ended Oct 22, as the TEDPIX surged almost 3 percent to marking the benchmark’s highest growth in more than 15 straight weeks.

The stocks’ broad rally began on Monday, which drastically changed the TSE’s usual trend; forcing unsettled investors contemplate pouring money once again into the exchanges.

According to the TSE’s website, the overall gauge of the  market soared 2,154 points or 2.99 percent to finish a bullish trading week at 74,132.8. The first market index rose 1,773 points or 3.35 percent to 54,707.3. The second market index climbed 3,019 points or 2.12 percent to end at 145,179.3. The free floating index jumped 3,103 points or 3.82 percent to settle at 84,311.6. The industry index surged 1,455 points or 2.38 percent to 62,513.2. The blue chip index was up 125 points or 3.79 percent to close at 3,414.8, and the financial index topped other major indexes as it gained 8,777 points or 6.79 percent to highlight the potential of listed industries at the TSE.

The total traded value and volume rose to new highs within the last few months. More than 3.89 million shares were traded within the week, portraying 128 percent growth compared to the previous trading week.

The total trading value of 11.2 trillion rials indicates almost 145 percent growth compared to the week before, based on the TSE’s report on the equity market trades.

The TSE’s sudden departure from the doldrums was spectacular enough to bring it back into the spotlight; making potential foreign investors’ eyes brighten up at such bullish trade.

Furthermore, the market’s impressive trend led investors to flock back to the equity market, collecting shares to enjoy the market’s accelerating pace.

Meanwhile, the impressive trade has been conducted in the absence of petrochemical and oil refining companies, which are currently undergoing new pricing structures or conducting their annual AGMs. Once these companies come back online they will significantly boost the market’s overall performance.

 Major Contributors

There are solid indicators that the TSE’s uptrend will continue in the coming weeks, though it may not be as breathtaking as Monday’s trade, market analysts believe.    

A. Speculations over feasibility of a comprehensive agreement indicate that Iran and the P5+1 are serious about reaching a deal.

Time is running out as the negotiations are nearing the Nov. 22 deadline. With regards to the positive atmosphere of the negotiations, it is more likely to achieve a deal, a group of traders said to Financial Tribune.

B. The current historic Price Earnings ratio has created an alluring stock market, which would probably absorb traders from rival markets after they reconsider trading at the TSE.

The surge happened on Monday and Tuesday, but investors became somewhat more conservative on the week’s last trading day on Wednesday.

C. It is becoming evident that fresh flows of liquidity are targeting the equity market, which will subsequently bolster the capital market.  

This is a blessing for the equity market in Iran, the largest untapped emerging market locally. The TSE’s market cap is not outstanding but the dividends rates are eye-catching, which is tempting the portfolio managers across the world.

Iranian brokerages, funds and investment companies are getting more signals from foreign investors as they are mulling over on how to get into the Iran’s equity market.  

But due to the prevailing recession in various industries coupled with the Western sanctions against Iran’s nuclear program, investing in Iran is still a bit risky for international investors.

This issue has been a barrier, although all market analysts in and out of Iran swear that as soon as the sanctions are lifted, foreign investors will be competing with one another to grab attractive opportunities in Iran.

Despite the broad rallies at the TSE, the TEDPIX is still in the red compared to its record high last year when the benchmark surged 136 percent, mostly because of the election of Rouhani accompanied by a currency collapse in Iran.

The administration and relevant authorities have tightened monetary policy to curb inflation. This policy accompanied by the Western sanctions has caused the stock market to fall more than 18 percent since last winter.

Nevertheless, the TSE is relatively back on track, as the TEDPIX drastically shifted to green, standing poised to wipe out broad losses of the past 10 months.