Economy, Business And Markets

Stocks Pull Back for 2nd Day

Stocks Pull Back for 2nd DayStocks Pull Back for 2nd Day

Stocks retreated for the second day in Tehran on Sunday, as a rout in banks pulled down the index.

Tehran Stock Exchange's main index, TEDPIX, slid for the second day. The benchmark closed 0.42% lower at 77,234.90 points for the day, TSE data show.

The index dropped to its lowest after 40 minutes into trading, but recovered most of the losses in the second hour of trade.

For the rest of the day the benchmark went sideways. Lenders Saderat, Pasargad, Tejarat and Mellat were sore losers of Sunday's trade. Persian Gulf Petroleum Industries was another loser.

Trading volume was down by 35% with over two billion shares, worth nearly $150 million, changing hands compared to Saturday's 3.18 billion share record.

Trading volume has picked up since the start of TSE's rally in mid-January, when sanctions against Iran were revoked. TSE saw its busiest day in recorded history on Feb. 9, with over 3.91 billion shares changing hands.

TSE has lost 1.4% so far this week after crawling up 0.5% the week before. The enthusiasm with which stocks rose over 20% seems spent. The market has been trading almost sideways for the past 10 days and the steep trend-line on which TEDPIX was moving is broken.

Equities started a rally on Jan. 16 when sanctions against Tehran's nuclear works were revoked. It opened the door to normalization of business and banking relations with the international community. Since the lifting of sanctions, TSE has surged 20%, while its smaller rival Iran Fara Bourse jumped 15%.

IFB followed TSE's daily trade pattern on Sunday, falling in the morning and recovering the rest of the day. However, the over-the-counter market fared better. Its benchmark, IFX, remained nearly unchanged, according to IFB's website, closing at 818.44 points.

Tehran Oil Refinery Company and Hormozgan Steel Company were the leading risers on Sunday's trade at IFB. Steel holding MIDHCO and Bank Day led the losses.

The rally from sanctions relief may be over; one reason is poor earnings expectations from companies. Companies are publishing their annual earnings reports and closing their books, as we approach the Iranian year's end on March 19. The results are bleak.

On Sunday, shares of 58 companies were closed to traders, Bourse Press reported.

Fifty-six of those companies were closed because they had to post sharp changes in their earnings—sharp being an over 20% drop or rise in earnings. Industry and Mines Leasing was closed for its annual shareholders meeting.

Sa'adi Tiles, for instance, is getting the boot for its ambiguous reporting.

Asghar Hendi, Oil Ministry's head of liabilities, said all the money owed to the Iranian Oil Ministry by foreign petroleum companies will be paid before the end of March. The money includes $2 billion from oil multinational Royal Dutch Shell and $5.3 billion from Emirati lubricant producer ENOC.

Money for the Oil Ministry means more fiscal spending or repayment of government's overdue debt to many listed and non-listed companies in Iran.