Economy, Business And Markets

TEDPIX Ends Volatile Week 1.6% Lower

TEDPIX Ends Volatile Week 1.6% LowerTEDPIX Ends Volatile Week 1.6% Lower

Tehran Stock Exchange’s benchmark index ended a volatile trading week on April 20, 1,319 points or 1.66% lower to close at 78,269.

In Iran, weekdays start on Saturday and the weekly holiday is on Friday. However, the stock markets are closed on Thursdays and Fridays.

TEDPIX took a nosedive during the first two days of the week by shedding 2,000 points to stand at its lowest in two months. January’s best performers, especially automakers, which led the stocks’ rally following the lifting of sanctions, were mainly to blame for the plunge. The more nimble over-the-counter market, Iran Fara Bourse, followed suit, with its benchmark, IFX, dropping to its lowest since February first.

Auto companies’ shares were on a gaining trend ever since the lifting of sanctions due to the news of foreign auto manufacturers intending to invest in the industry. Many of these foreign companies, however, are yet to sign agreements with their Iranian counterparts, while others, it turned out, never planned to engage in the first place.

The massive downtrend was shortlived, however, as the two indices rebounded on Monday and recouped part of the hefty losses.

According to Ali Motevalli, managing director of Omran Fars Brokerage, the equity market’s high potential for growth in the post-sanctions period is currently hampered by several obstructing factors, evident in the stocks’ rollercoaster behavior during the past week.

“The market is still waiting for tangible economic developments following the implementation of JCPOA,” he said, emphasizing that the still unclear economic condition has brought about disorderly growth for certain companies merely based on rumors.

Such “illogical and emotional” behavior eventually leads to heavy crashes, affecting the whole market, he added.

Motevalli also pointed to high interest rates as a serious impediment to the market, saying banks should close the significant gap between the interest rate and the inflation rate so that there can be competition between the money and capital markets.

While the inflation rate currently hovers slightly above 10%, interest rates are at 20%.

  Stock Market Weekly Report

According to TSE data, over 6.4 billion shares valued at $418.9 million changed hands in 417,000 transactions during the past week. The number of shares traded and weekly trade value shrank 1.4% and 13% respectively compared to the prior trading week.

TSE’s First Market Index lost 1,027 points to stop at 54,839 and the Second Market Index gave up 2,268 points to close at 170,759. Both indices retreated 1.84% and 1.31% compared to the previous week’s figures respectively.

More than 880,000 participation bonds valued at $25.2 million were traded, registering a 362.1% and 362.2% surge in the number of traded bonds and weekly trade value respectively.

Leather tanning, dressing and footwear production sectors saw the highest weekly rise in share value (8.43%), followed by metal minerals extraction (4.27%) and base metals (3.59%).

The IFX gained 1.7 points or 0.2% to close at 793 during the same week.

According to IFB data, over 1.5 billion securities valued at $199.8 million changed hands.

The number of shares traded and weekly trade value shrank 1% and 34% respectively compared to the prior trading week. The IFB’s market cap was down $8881.5 million or 3.2% for the week to stand at $26.7 billion.

More than 135 million securities changed hands in IFB’s First Market valued at $8.2 million, registering a 29% and 25% decline in the number of shares traded and weekly trade value. The Second Market witnessed the trading of 594 million securities worth $54.8 million, as the number of traded shares and weekly trade value registered a 14% and 18% decline.

The base metals sector had the highest weekly increase in shares’ value (21%). Electricity, gas, steam and hot water (16%), and oil products, coke and nuclear fuel (10.4%) followed.