Tehran’s equity markets extended their gains on the second day of February, with both Tehran Stock Exchange and Iran Fara Bourse rising over 1% as optimism about the improving economic prospects and the possibility of a deal between OPEC and non-OPEC oil producers to cut supply boosted investor confidence.
TSE’s benchmark TEDPIX has rallied about 17.7% since the implementation of the nuclear deal, which marked the official end of western sanctions regime. IFB’s IFX has gained 12.1% during the same period.
TEDPIX went up 1.11% to 73,725.50 points by Tuesday’s close, a new 13-month high, as bullish bets on the market’s future rose.
The IFX gained 1.09% and closed at 787.11 points on Tuesday, despite the market’s heavyweight Maroon Petrochemical Company losing 4.66%.
The lifting of sanctions is the winning ticket for Iranian equities amid the global turmoil. The optimism and removal of the greatest cloud of uncertainty over Iran’s economy are outweighing poor domestic and international economic conditions.
Iranian equities’ performance runs contrary to stock markets in the Persian Gulf periphery, all petroleum-exporting nations. A 70% slide in oil prices since mid-2014 has forced oil and gas exporting nations to resort to deep spending cuts.
Stock markets in the Middle East, except Iran, are at 10-year lows due to the slump in commodities and a general slowdown in the global economy.
Benchmark Brent oil prices averaged $43 a barrel in the fourth quarter of 2015, down from $76 a year earlier.
The oil industry’s worst downturn in three decades is set to persist with Brent averaging around $33 per barrel in 2016 so far.
Foreign Play
TSE and IFB have seen a surge in trading by foreign investors since the implementation of the nuclear deal between Iran and six world powers eased international sanctions against the country.
The value of transactions by overseas investors, mostly European, increased to about $16.6 million in the 10 days through Jan. 26, according to Hassan Qalibaf-Asl, the chief executive officer of TSE.
That compares with about $1.6 million in the 10 days prior to the nuclear deal’s implementation on Jan. 16.
“It hasn’t been very long since the implementation, but its impact in this short period of time has been very positive,” Qalibaf-Asl said in an interview at his office in Tehran.
“It’s also psychological. It has generated optimism about the future because the picture is clearer for investors.”
Inflows to the country may reach as much as $1 billion after six to eight months, according to ACL Assets Management, an investment firm that focuses on Iran.
Qalibaf-Asl said about 500 trading codes have been issued to foreigners by Iranian authorities, which will enable them to actively buy and sell shares.
“Around 100 of the codes belong to institutional investors and 400 to individual investors,” he said.
According to Qalibaf-Asl, the nation’s debt market has “good potential for development”.
“The bourse is planning to introduce new debt instruments with the help of the Central Bank of Iran that would help foreign investors manage the risk of their equity investments,” he said.
Daily TSE, IFB Report
Tehran Stock Exchange’s overall index TEDPIX added 812.70 points or 1.11% to end Tuesday trade at 73,725.5.
More than 2.8 billion shares valued at $127.5 million were traded, as daily trade volume went up by 800 million shares while trade value declined slightly.
The Price Index gained 311.90 points or 1.11% to end at 28,291.2.
The First Market Index was up 653.10 points or 1.30% to reach 51,052.
The Second Market Index gathered 1,293.90 points or 0.79% to post 164,425.9.
The Industry Index jumped 737.50 points or 1.22% to post 61,309.3
The Free Float Index rose 1,176.18 points or 1.45% to register 82,074.60 while the TSE 30 Index added 38.80 points or 1.25% to settle at 3,131.1.
And the TSE 50 Index gained 23.80 points or 0.80% to finish at 2,983.9.
More than 65% of the listed companies worked in favor of the benchmark.
Mobarakeh Steel Company, with a P/E ratio of 10, gave the biggest boost to the benchmark by 104.31 points, followed by MAPNA Group and National Iranian Copper Industries Company with 101.61 and 71.66 points respectively.
Iran Telecommunications Company had the most downbeat performance with 101.7 points, followed by Iran Mobile Telecommunications Company and Iranian Shipping Lines Company with 25.15 and 23.96 points respectively.
Meanwhile, Iran Fara Bourse’s overall index IFX rose 787.11 points or 1.09% to settle Tuesday trade at 787.11.
According to IFB, more than 1.5 billion securities valued at $88 million changed hands, with daily trade volume nearly doubling and value rising 70% compared to the prior trading day.
Bank Day recorded the highest trade volume and value as it traded 151 million shares worth $6.6 million.
Tehran Oil Refining Company and Sobhan Investment Company were also on investors’ radar.
Shiraz Oil Refining Company, Ravan Fanavar Engineering Company and Fanava Company had the highest rise in shares’ value.
Marun Petrochemical Company, Kosar Financial and Credit Institution and Shahrood Food Company had the highest decline.
Etemad Fund with the transaction of 2.8 million shares valued at $972,000 registered the highest trade volume among listed exchange-traded funds.
