Economy, Business And Markets

IFB at 15-Month High

IFB at 15-Month HighIFB at 15-Month High

Iran Fara Bourse edged up to finish the week at its highest in 15 months on Wednesday, again shining brighter than its larger rival, Tehran Stock Exchange.

TSE continued its slumber on the last day of trade this week, as uncertainty about the outcome of upcoming elections created caution among traders.

People will go to the polls on Feb. 26 to vote in two simultaneous elections. A vote for candidates for the Assembly of Experts—a body of 88 members whose main task is to select the next leader of the Islamic Revolution and monitor his performance–and another for the parliament.

The outcome may give a jolt to equities, taking them back to the month-long rally in equity markets. Both TSE and IFB have been trading sideways since Feb. 11 and trying to break above the 78,000-point mark.

Equities rallied in Tehran from Jan. 16 when sanctions against Tehran's nuclear program were revoked, opening the door to normalization of business and banking relations with the international community. During the month-long rally, TSE surged 20% while IFB jumped 15%.

The rally has brought average market price to earnings ratio–a measure of how hot stocks are deemed–from 5 in mid-January to around 7 in mid-February. It is still below the 7.5 it hit in Jan. 2014.

The S&P 500's average P/E is now 21.19 and 16.89 for the Dow Industrial Average.

Markets are closely eying the elections. If the so-called "opponents of the nuclear deal" win the parliamentary vote, the market will stall in all likelihood, as the deal was the reason behind the recent rally in the first place.

On the other hand, a moderate majority can renew the rally as it will mean the government's job of opening up the economy to the private sector and foreign investment will become much easier.

Though, as we approach the New Year holidays (starting March 20), market momentum will be restrained.

> IFB Hits Record High

Iran Fara Bourse outperformed TSE as usual. The over-the-counter market's benchmark IFX edged up 0.27% to a record 830.79 points on Wednesday–its highest since Nov. 10, 2014.

Trade volume picked up by 600 billion rials and hit 2.7 trillion rials compared to Tuesday.

Tehran Oil Refining Company was the market leader, up 4.51% to 5,288 rials for the day, closely followed by Iranian Investment Petrochemical Group, up 4.74% to 1,656 rials. Shiraz and Lavan refineries were the other main risers.

The refining company has surged almost 10% since Monday, while IIPG is up 5.5%. The two companies have been the biggest winners of this week's trade on IFB.

> TSE Seesaw

TSE's benchmark index closed 0.18% higher at 77,840.20 points on Wednesday, as a sudden pickup in the last minutes of trade pulled the market out of the red.

TEDPIX fell in the first hour of trade but later recovered some of the losses. It would have ended the day in the red but a sudden 200 point jump in the index, from the trade of 900 billion rials of shares in the last 10 minutes of trade pulled the benchmark into positive territory.

Trade volume rose to 5.18 trillion rials from Tuesday's 4.4 trillion rials, a 17.7% jump, courtesy of last-minute trading.

Persian Gulf Petrochemicals Company was the main riser of Wednesday's trade on TSE. Its shares surged 3.04% to 6,098 rials by the market close, giving a 116-point lift to TEDPIX.

Telecommunications Company of Iran, Bandar Abbas Refinery, Fajr Petrochemical Company and Iranian Copper Industries Company were the other main risers on TSE.

Informatics Services Corporation and Mobarakeh Steel Company were the main market laggards. ISC's shares lost 7.4% this week.