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Bearishness Reigns Over Markets

Bearishness Reigns Over MarketsBearishness Reigns Over Markets

Bearishness continued to dominate markets this week, as shares on both Iran’s equity exchanges declined while trading volume plummeted.

Rival markets were also eventless. Currencies held steady while gold rose in Tehran, the Financial Tribune analysis shows.

Investors remain wary of stalling economic activity and fears of returning to recession.

Recent political developments regarding the nuclear deal between Iran and the West are snuffing out hopes of a swift reconnection of Iranian businesses with their foreign counterparts. Fear of running into remaining US sanctions is also keeping foreign businesses at bay. Without foreign investment, Iranian businesses will be hard pressed to turn a profit.

Stocks on Tehran Stock Exchange sank for the second week in a row and closed at a three-week low. Benchmark, TEDPIX, finished the week 198 points or 0.26% lower at 75,876 points on Wednesday. The index is hovering just off a four-month low.

Trading volume on the TSE dropped 19% to 7.67 trillion rials, compared to the prior week. The number of buyers plummeted sharply to 75,000 people from 166,000 last week—a 54% drop.

Most of TEDPIX’s retreat came from Financials Index slipping 1.33% for the week, twice as much as the second worse index in the market, TSE’s top 30.

The worst performing industries were miners of non-basic metals and paper producers, falling 7.5% and 6.5% respectively.

There were winning industries in this week’s slow trade. Producers of metal goods jumped 12.8% while sugar producers went up 6.5% collectively. But their small share of the market meant the index was headed down. Out of 40 industries listed on the exchange, 25 lost ground.

  Fara Bourse Follows Suit

Shares on Iran Fara Bourse over-the-counter market also tumbled to a three-week low. The market’s equity index, IFX, lost seven points or 0.85% and closed at 808.3 points by Wednesday’s close.

Stocks opened six points higher on Saturday, but lost that and more by the week’s end, erasing 3.3 trillion rials ($130 million at market exchange rate) from last week’s close.

Overall trading slowed on the IFB. Total volume dropped by a third compared to the week before to 7.8 billion rials. Trade volume on the IFB fell slowly from 2.29 trillion rials ($75 million) to 790 billion ($26 million) on Tuesday, but shot up to 3.63 trillion ($119 million) on Wednesday.

The basic metals industry and financials were the main losers of the week’s trade. Nearly half the trading that went on the IFB throughout the week concerned these two industries. The two industries almost make up 30% of the market. IFB’s leading industry, chemical producers were out of the spotlight for the week.

  Largest Bond Offering

IFB also saw the opening of trading for the largest batch of bonds ever sold on the market. Petroleum giant National Iranian Oil Company’s Musharakah sukuk opened for trading on Monday after a preplanned two-month delay from their issue date.

The company raised 50 trillion rials ($1.45 billion at market exchange rate) in March in Iran’s largest bond offering to date. The company is in a rush to ramp up its production and reinvest money into developing its aging oilfields.

The event did not attract much trading, however. Bond trading dipped 40% compared to the week before to 2.7 trillion rials ($78 million at market exchange rate).

Other asset markets were relatively calm during the week. The US dollar remained stable. The greenback traded for 34,970 rials, while the euro changed hands at 39,500 rials per euro.

The Azadi bullion coin, the benchmark of gold trading in Iran, advanced 1.1% to 10,190,000 rials by the weekend. The coin followed gold’s rise in international markets, from 1,243 an ounce on Monday to 1,262 on Wednesday.

Intro: Tehran Stock Exchange’s benchmark index finished the week 198 points or 0.26% lower at 75,876 points on Wednesday

 

Financialtribune.com