Stocks Climb in Mehr

Stocks gained small ground in the month of Mehr (ended October 21) on both stock exchanges in Tehran, as rising oil prices and US easing  of sanctions helped shares rise.

Tehran Stock Exchange rose over 1,800 points or 2.38% to a two-month high of 78,091 points in Mehr. The market has been trading in a tight range, what technical analysts call a sideways trend. TEDPIX had started the month just off a seven-week low.

TSE's market cap is now 3,238 trillion rials ($90.1 billion at current market exchange rates) with the month's gains accounted for.

The market's Industrial Index rose 2.79% to 65,270 rials for the month, outperforming the entire market.

Medium growth stocks fell an average of 3-7% on the TSE, as opposed to other value and growth stocks rising, according to Rahavard365.com, a market analytics website.

The largest growth in the market came from medium-sized value stocks and small growth companies, with between 7-10% rise.

The condition was more acute on Iran Fara Bourse. Its main index, IFX, rose a meager 1.66% to 824.46 points. Trading was constrained in a 17-point range throughout the month. The IFX has steadily risen in the past four months to its 546 trillion rial ($15.2 billion) market size on Friday.

All major groups rose on the IFB during Mehr. Small-growth companies and medium-sized value stocks rose the most on the exchange during the period.

> Rising Crude Prices

The growth in the markets had much to do with oil. Crude prices have risen since OPEC and Russia agreed on freezing output earlier this month. WTI crude rose 11% to $50.69 during the month, Bloomberg data showed. Brent crude gained 9.2% to $51.57 during the same period.

Higher oil prices mean more revenue for the government, as it struggled to cover its operational expenses in the first quarter. Also, it would mean more revenue for Iran's petroleum companies, including petrochemical producers that make up 45% of IFB's market cap. Nearly half the stocks on the TSE are either directly or indirectly related to the petroleum industry.

> Quiet Currencies

Currency markets were quiet in Mehr. The greenback rose to a high of 36,360 rials on October 16 but later slipped back to its exchange rate at the start of the month at 35,920 rials, Tehran Gold and Jeweler's Union website shows.

Sterling, however, dipped against the rials, as fear of Brexit pressured the currency. The British pound lost 4.8% and ended the month at 44,600 rials, Sarafi Royal, a money exchanger website, showed.

The Central Bank of Iran has been steadily weakening the rial in the past year. The trend continued in Mehr as its benchmark rate for the US dollar rose 0.9% to 31,687 rials.

The bank extended its self-imposed deadline to unify Iran's forex regime by eight months to March 2017. Unifying the exchange regime based on a single-managed market rate will bring transparency and ease to the economy, and reduce opportunities for corruption.

Gold dropped 5.46% to $1,264.49 during the past 30 days, Bloomberg data showed.

The Imami gold coin, the benchmark for gold trading in Iran, dropped accordingly. It lost 2.3% and ended the month at 10,939,000 rials. The coin's safe haven allure in Iran's current pessimistic economic environment dampened its fall.