Economy, Business And Markets

Fragile Trading Week at TSE

Fragile Trading Week at TSE
Fragile Trading Week at TSE

After six weeks of rallies at the Tehran Stock Exchange, the benchmark pulled back amid ongoing uncertainties as well as newly-debuted shares within the week ending November 19, to broadly wipe out the recent gains.

The stock market is being negatively impacted by various indicators, with the most important being the lingering talks between Iran and the P5+1 to reach a comprehensive deal on Iran’s nuclear program, as well as the recent Initial Public Offerings (IPOs).

Unlike the past few months, stocks are not waxing and waning. The liquidity has surged and the ever-increasing number of traders demonstrates a buoyant stock exchange. Moreover, millions of orders for IPOs were another contributing factor to the TSE’s stability.

Despite the fact that the outcome of the nuclear talks is shrouded in ambiguity, the number of traders within the week, ending November 19, hiked by a 37.4 percent compared with the prior week, TSE data revealed.

According to the TSE’s website, the stock market gauge broadly retreated last week, slipping 1,341 points or 1.75 percent to stand at 75,248.4. The first market index fell 1,174 points or 2.07 percent to 55,591.5. The second market index tumbled 1,417 points or 0.95 percent, settling at 146,962. The free floating index was down 1,501 points or 1.7 percent to end at 86,629.3. The industry index lost 1,000 points or 1.57 to 62,814.5. The blue chip index plunged 78 points or 2.21 to finish at 2,448.7, and the financial index pulled back 4,224 points or 2.77 percent leveraging the largest negative impact on the TEDPIX, settling at 148,528.4.

Both trading volume and value recorded almost 14 percent decline compared with the last trading week.

 Although the TSE was witnessing a negative trend within the week, many analysts expect broad rallies to come in the near future. Meanwhile, a comprehensive agreement on Iran’s nuclear talks could be a practical contributor.

Skeptical investors withdrew their capital partly; however this move is temporary and some of their capital is destined for the new debuted shares.

As the equity market is waiting for the outcome of the nuclear talks, the weekly negative sentiment did not impede even shaky investors to broadly sell off shares. In addition, the market was not witnessing prolonged sell off lines.

 Fresh IPO

Khuzestan Cement Company (KCC) is the 3rd company expected to launch its IPO within the upcoming days, with investors expecting 65 million shares, which account for 10 percent of the company’s total shares, SENA reported.

The new IPO is coming in light of the recent successful launch of the Cement Investment and Development Company, which saw people lining up to buy its shares.

The KCC plans to offer 20 percent of its shares via the equity market in the long run. The company’s capital is valued at more than 6.5 trillion rials, and it enjoys the latest technologies in its cement production line. KCC’s daily production exceeds 10,000 tonnes of cement as well as 8,000 tonnes of clinker.  

Basically, when market liquidity jumps, attractive IPOs find a way to absorb investors. Investors have known for a while that the SEO in line with the TSE planned to offer IPOs, which weighed on the benchmark temporarily, but contributed to the market surge in the long term.