Experts Predict Iran Equity Market Performance for Next 6 Months

Certain industries are poised to benefit from the current market dynamics in the next six months ending June 21, 2017.

This was the conclusion of a report in the Persian daily Donya-e-Eqtesad, which cited several experts.

The nuclear deal Iran signed with world powers last year and the consequent lifting of economic sanctions against Iran early this year gave rise to a wave of optimism, which in turn boosted the equity markets.

Stocks soared to record highs, as a surge in bullish bets pushed up both Tehran Stock Exchange and Iran Fara Bourse.

The rally’s momentum, however, was transitory, as enthusiasm ebbed amid remaining US sanctions, and European banks and companies’ fear of running afoul of the US Office of Foreign Assets Control.

The emergence of Donald Trump as the new US president also rattled global markets. Naturally, the reverberations found their way to Iran, as investors began speculating about the fate of Iran’s nuclear deal and the US dollar’s rise against the rial.

The views of two experts are presented below:

Behzad Golkar, a capital market expert, said the sectors of oil, petrochemical, iron ore, steel, zinc and copper are going to benefit the most in the six months to come because of global and domestic factors.

OPEC’s first production cut in eight years pushed oil prices up to the $60 territory and is expected to rise even further in the following months.

Consequently, urea and methanol prices rose by 11% and 50% from September prices to reach $210 and $410 per ton respectively on Sunday.

Experts believe the trend is likely to continue and will buoy petrochemical shares along the way.

Copper and zinc also witnessed an upward trend since early 2016 and spiked to highs of $6,000 and $2,900 per ton respectively in early December.

Exporters of iron ore and steel are expected to benefit the most from the dollar’s rise. Demand for the greenback shot up last month (ended December 20), bolstered by its rise to 14-year highs in international markets, sending it to historic highs against the rial.

The US currency surged nearly 10% during the month breaking above the 40,000 rials per dollar mark on December 21, for the first time since the height of Iran’s currency crisis four years ago.

Golkar believes that the dollar’s gains will continue through the next year and favor exports.

Likewise, Hojjatallah Seydi, managing director of Kharazmi Investment Company, believes petrochemical and mining firms will be the main winners during the forecast period, as the government works to boost exports while the dollar rises.

Automotive firms, according to Seydi, are also poised to have a good performance, as they are boosting production and introducing new models to the market.

“Telecoms firms are also expected to do well,” he said, “as they are modernizing infrastructure to increase their subscribers.”

Housing, cement and steel shares will not have much going for them, says the market player, considering the likelihood of a persisting slump in the construction sector.