Tehran Stock Exchange Gauge Ends H1 10.77% Higher

Tehran Stock Exchange’s primary index TEDPIX gained 8,346.3 points or 10.77% during the first half of the current fiscal year (March 21-Sept. 22) to end at 85,831.8.

The over-the-counter Iran Fara Bourse’s all-share index, IFX, jumped 76.91 points or 8.73% for its part to end the period at 957.31.

TEDPIX is currently standing at its 45-month high and the IFX is at the highest level it has ever been.

Shahrivar, the sixth month of the Iranian year (Aug. 23-Sept. 22) was witness to the two exchanges bagging most of their gains, TSE's website reported.

The TSE benchmark index soared by 3,459 points or 4.2% during the month–the highest monthly rise recorded so far this year. IFX, for its part, rose by 20 points or 2.2% during the month.

TSE and IFB trading opened the New Iranian Year on March 25, 2017. TEDPIX started the year at 77,230 and IFX at 875.8.

Petrochemical, sugar and paper stocks were the top performers during the six-month period, growing 98.53%, 63.57% and 63.1% respectively.

The three industries gathered most of their gains during the sixth month and vastly outpaced other performers. The much-hyped computer and base metal stocks, for instance, rose 38.95% and 33.5% in H1 respectively.

Q2 Turnaround

Both TSE and IFB exhibited a similar pattern in their fluctuations in H1, with only slight deviations.

The first month of the Iranian year (started March 21) was rather uneventful, as stocks rose steadily, coming right out of the Iranian New Year holidays. TEDPIX gained 1.84% during the month (March 21-April 20) and IFX was up 3.6%.

Things were quiet for most of the second month as well, save for the significant upsurge on May 20, as the final results of the presidential election race were announced and the incumbent President Hassan Rouhani was reelected.

TEDPIX jumped 3.2% during the month to reach its six-month high. IFX grew 2.1%. The growth, however, was expectedly short-lived, as investors needed further economic signals to maintain their optimism.

Positive signals were nowhere to be found in the third month as bears dominated the market. The advent of the holy month of Ramadan, widely known to be a period of lower productivity in the economy, price corrections due to lack of solid economic growth, sliding global oil and commodity prices and the Central Bank of Iran’s initiatives to get banks in line caused TEDPIX and IFX to drop 2.88% and 2.66% respectively.

Most of the drop happened during the month’s third week, when two terrorist attacks hit the capital city–one in the parliament building in downtown Tehran and another at the mausoleum of the founder of Islamic Republic Imam Khomeini.

Seventeen people were killed and 52 others were wounded in the twin attack, for which the self-styled Islamic State terrorists claimed responsibility. TEDPIX and IFX reacted by dropping 0.67% and 1.76% respectively on the same day.

Things took a markedly turn, as Q1 came to a close. The two indices successfully regained parts of heavy losses incurred to notch 2.5% and 2.2% higher by the end of the fourth month (June 22-July 22).

The growth mostly had to do with rising global commodity prices, prompting metal extraction, base metals and non-metal product industries to record a 9% uptick, making them the main drivers of the markets alongside sugar, tiles and plastic producers.

Most companies were due to hold their annual general meetings in the month, as their deadline was set for July 22. This flow of new information injected new life into the markets, as deadlines for annual general meetings reached closer.

The promising rise in global commodity prices kept its course in the fifth month (July 23-Aug. 22) with copper, aluminum, iron ore and steel producers boosting stocks. TEDPIX and IFX rose 2.1% and 1.4% respectively.

One of the year’s most important economic developments happened in this month, as the Central Bank of Iran announced a new directive to cut banks’ annual and fixed interest rates to 15% and 10% respectively. The measure was meant to channel capital from the lenders’ low-risk, high-return vault to more productive parts of the economy, such as the capital market.

CBI is still struggling with banks to enforce full compliance, yet the move appears to have been effective in at least heartening capital market investors in the government’s insistence on reform.

Stocks Defy Trumpian Rhetoric

Investors exhibited their confidence in the economy and the fate of the Iran nuclear deal just a day after US President Donald Trump baffled world leaders with a fiery speech at the United Nations General Assembly on Sept. 19.

In his first appearance at the annual gathering of world leaders, Trump used a 41-minute speech to take aim at the 2015 nuclear deal negotiated by his predecessor, Barack Obama. He called it an embarrassment without giving any proof to back up his claim and hinted that he may not recertify the agreement when it comes up for a mid-October deadline.

The speech’s potential political risks for the Iranian economy were high, but investors remained nonchalant as they closed Wednesday trade at TSE 487.90 points or 0.7% higher.

This is while Tehran’s markets were rocked by Trump’s election as the 45th president of the United States back in November, forecasting doom and gloom based on his anti-Iran rhetoric. Shockwaves hit equities on November 10, with TEDPIX taking a 1.83% drive and IFB tumbling by 2.4%.