Economy, Business And Markets

Hope Returns to Tehran Stock Exchange

Hope Returns to  Tehran Stock Exchange
Hope Returns to  Tehran Stock Exchange

A big rally at the Tehran Stock Exchange (TSE) pushed the TEDPIX above 75,000 at Saturday's close, demonstrating a strong bullish trend, as all indices recorded breathtaking earnings, with the free floating index leading the gains at the week's first trading day.

The market's main index surged to a new six-month high, as the positive speculations over a comprehensive nuclear deal between Iran and the p5+1 has relieved the skittish investors to line up for a wide variety of shares at the equity market.

The recent upbeat economic news and the ever-increasing demand of foreign investors to get into the last large untapped frontier market in the world are considered among the contributors to the market's bullish trend.

According to the TSE's website, all indices rose broadly on Saturday, extending the recent rallies, as the benchmark rose to a new peak, promising of the massive wipeout of losses recorded during the past twelve months.

The TEDPIX soared 876.9 points or 1.18 percent to finish at 75,028, settling above the 75,000 mark for the first time in the past six months. The first market index pulled higher 796.7 points or 1.45 percent to end at 55,678.5. The second market index was up 733.3 points or 0.51 percent to 144,888.3. The industry index jumped 480 points or 0.77 percent to 62,926.9, and the blue chip index managed to gain 58.3 points or 1.71 percent to 3,476.4.

The free floating index had a spectacular trading day as it climbed 1,399.3 points or 1.65 percent to settle at 86,232.1.

More than 1.05 billion shares changed hands to record more than 27 percent growth. The total trading value surged more than 25 percent compared to the previous trading day.

Financial group topped the listed groups as it ranked the most valuable group and had an attractive trading day.

Based on the TSE's report, Tejarat Bank had the highest volume of trades, and thus its positive contribution to the TEDPIX was significant. Iran Khodro took the second place and Saderat Bank stood third.

Iran Khodro had the highest value of trades, and Tejarat Bank and MAPNA stood next, respectively.

Mellat bank had the highest positive impact on the TEDPIX, with a 73.83 percent growth. The National Iranian Copper Industries Co. and MAPNA were two other major contributors, which helped the spectacular lift of the TEDPIX.

The stocks are getting much more attractive as most of them have already hit their rock-bottom value. Moreover, the positive atmosphere in nuclear talks is benchmarking the hidden potential of the equity market, analysts believe.

Tracking the stock market's trend within the past 11 days indicates a 4.18 percent jump, which has erased a big chunk of the TSE's big losses within the past year.

Why Investing at TSE?

Despite the fact that the sluggish economic growth, which has still partly gripped the industries, drastically changed the earnings at the TSE within the past 12 months, the signs of a new boom is just around the corner.

The TSE soared 130 percent last year to a record high, beating returns posted by 93 major global equity gauges tracked by Bloomberg. The Tehran market's new gains have made it possible to notch the previous record highs.

The recent sharp rise of the market's benchmark is a promising trend, which may lead to spooking the investors once again.

"The recent slump in the gold and foreign exchange market, the positively outlined semi-annual reports of the listed firms at the TSE, and with new liquidity being injected into the market by individual investors, significantly contributed to the sudden surge at the equity market," Keivan Sheikhi, head of information and statistics department at the TSE told the Financial Tribune.

He also noted that the government's subsidy reform plan changed the expectations, after the positive performance of companies within the past six months demonstrated the effectiveness of the mentioned plan.

Sheikhi also noted that real estate used to be a profitable market for traditional investors, but the ongoing slump at this market changed the target of this group of investors toward the stock market.

It should be noted that the exceptional price earnings ratio (P/E) at Iran's equity market is another crucial factor that has caught the investors' eye and has convinced them to shore up their portfolios or garnering shares.

"The average P/E ratio in Iran is around 5.56, while the number in the Persian Gulf Arab states stands between 18 to 31. This portrays a spectacular opportunity for international portfolio investors," Sheikhi stated.

"The fundamentals of the Iranian economy look as attractive as any emerging market, and arguably more so, since the earnings of our stock market is much more than other markets around the globe."

The bottom line is that stocks have had their hiccups and the TSE would no longer grapple with drastic downtrends, and like any roller coaster, it is expected to end back precisely where it started.