Stocks End Month Higher After Rollercoaster Ride

Markets in Tehran had a rocky month. Though they mostly traded sideways, both of Tehran’s equity exchanges hit record highs in the month.

However, the month’s calamitous event was Donald Trump’s election as the 45th president of the United States, which sent markets tumbling on November 9.

The Iranian month of Aban ended November 20.

The rial’s downtrend also continued, taking the dollar and other currency majors to fresh highs against the Iranian currency. The government’s weak fiscal position is augmenting the trend.

Aban was a busy month behind the scenes of markets. Kish Island played host to INVEX 2016, held from October 31 to November 12, which consisted of an international exhibition on Iran’s financial industry, including securities markets, banking, insurance and privatization, in addition to an exhibition on Iranian investment opportunities.

Later in the month, angry investors wrote a letter to the head of Iran’s markets regulator objecting to rules benefiting large institutions, especially in primary offerings.

The letter addressed to Shapour Mohammadi, the head of the Securities and Exchange Organization, leveled allegations of insider trading and favoritism, at brokerages and exchanges, stopping just short of accusing SEO of colluding with them. Investors also criticized increasing failures in market trading platforms and questioned the reasoning behind these failures. The SEO has yet to react to the letter.

Tehran Stock Exchange announced the upcoming listing of 40 companies, 37 of which will offer shares to the public for the first time. The companies will be accepted into the exchange before the end of March, though the IPOs will take longer to complete.

  TSE’s Ups and Downs

The TSE benchmark finished Aban 1.5% higher at 79,278.6 points after it recovered some of the losses from Trump’s election.

The Republicans’ shock win against Hillary Clinton earlier in the month sent the market down 1.83% on November 9, though the market recovered half of its losses in the succeeding days.

Ten days prior to Trump’s election, TEDPIX capped its largest daily gain since March 12 and hit a 6-1/2-month high on improving petrochemicals and metals prices.

The exchange’s benchmark advanced over 1,000 points or 1.31% to the Aban’s high at 80,340.70 points on October 29. National Iranian Copper Industries Company, Ghadir Investment Holding, Persian Gulf Petrochemical Industries Company, Parsian Oil and Gas Development Company and Golgohar Mining and Industrial Company led the market’s climb.

  IFB’s Sideways Trend

Iran Mercantile Exchange got the go-ahead for getting listed on Iran Fara Bourse over-the-counter market’s primary board.

IFB’s gains in Aban were a modest 1%. After its benchmark, IFX, tried twice to break above 842 points, incidentally its highest since 17 November 2014, it shed some points and settled at 833 point by the month’s end.

IFB too was hit by the results of the election, dipping 2.4% on November 9, but the market recovered quickly from the shock.

  Rial’s Dark Hour

Poor fiscal conditions and a sluggish economy are pressuring the rial, among other emerging market currencies. The US dollar rose 3.9% to a 10-month high of 37,200 rials by Aban’s end, according to rates published by Eranico website.

The dollar’s swift rise in Tehran’s markets pushed it further away from the central bank’s key exchange rate, which also rose by 1% to 32,061 rials per dollar, increasing the gap between the two rates from the previous month to 16%.

Central bank officials said the multiple-exchange rate regime will be abolished before the end of March 2017, though this is the second time the bank has given a deadline for adopting a more prudent forex regime. The previous deadline was mid-August.

According to Pouya Jabal Ameli, an analyst with the Central Bank of Iran, the policy is not being pursued due to the prevailing economic outlook.