Economy, Business And Markets

Benchmark Creeps Up Despite Economic Concerns

Benchmark Creeps Up  Despite Economic ConcernsBenchmark Creeps Up  Despite Economic Concerns

The Tehran Stock Exchange’ gauge recorded its third consecutive positive day to recoup some ground after recent sharp retreat and selloffs; however, the cloudy prospect of the economy is expected to hinder a surge in the benchmark in the near future.

After a relatively broad rally on Tuesday, stocks started to record fresh gains at the very beginning of Wednesday’s trade at the TSE, while the TEDPIX failed to maintain its gains, staging a mid-day downtrend, though it didn’t fell short of ending in green.

Most of indices contributed once again helping the TEDPIX to settle in green, while the second market index was the only laggard.

The TSE’s seesaw trading day ended in a slight rally by the benchmark at Wednesday’s close, after the TEDPIX edged up 59.4 points or 0.08 percent to end the day at 70,153.8.

The first market index gained 112.2 points or 0.22 percent to 51,586.8. The second market index shed 333.8 points or 0.24 percent to settle at 138,589.2. The free float index pulled higher 83.2 points or 0.1 percent to 80,239.2. The industry index rose 50.1 points or 0.09 percent to 58,737.7, and the blue chip index inched up 6.6 points or 0.21 percent to finish week’s last trading day at 3,149.2, TSE data indicated.

More than 788 million shares changed hands, valued at 1.58 trillion rials, posting 7.8 percent growth for trade volume, while the trade value registered an almost 14.6 percent growth compared to Tuesday’s trade.

According to TSE data, Mellat Bank pension fund had the highest volume of trade, amid massive selloff, and the Mine and Metals Development Investment Company was a shelter for investors lining up to garner its shares, registering the second highest volume of trade. Iran Transfo Corporation recorded the third highest volume of trade, after investors tried to get rid of its shares over ambiguities about the company’s privatization process.

The MAPNA Group was the greatest positive contributor to the benchmark. Parsian Oil and Gas Development Company, and Pardis Petrochemical Company took the second and third places, respectively.

Among the listed industries, auto manufacturers industry had the highest volume and value of trade, being recognized as a safe haven for investors, SENA reported. Electrical devices and financial groups were the other popular industries of the day at the TSE.

 Equity Market Projections

Panic selloffs, which had engulfed stocks earlier this month, are unlikely to return. Considering the lowest ever average Price Earning (P/E) ratio at bourse, and resistance level of 70,000 marks, stocks may not nosedive anymore, at least for the foreseeable future.

Market laggards surrounding the stock market are foreign exchange fluctuations - which is likely to make the inflation rise again, speculations of an imminent budget deficit, and the existence of the US-led sanctions against Iran over its nuclear energy program.

Since the performance of almost half of the listed firms at the equity market is correlated with exports, the recent foreign exchange fluctuations may offset their potential losses to some extent. In addition, there are speculations about an increase in Iran’s oil production, which can lead to a higher level of export and more revenues, respectively.

Regarding industries affected by the dramatic oil plunge, some of them may resort to the first solutions mentioned above, while for others a downbeat performance is inevitable.

Analysts are skeptical about the idea that the country will encounter severe economic hardships; however, the stock market may not record big gains anytime soon, let alone reaching its previous record highs.

To conclude, the bourse appears to have found at least short-term bottoms, and both individual and institutional investors have stopped worrying that lower oil prices will mean sharp cut-backs in government spending with the aim of unremitting economic growth.

 Top Brokers

During the first nine months of the current Iranian year (March 21-December 21), almost 40 percent of online trades at the equity market have been carried out through six brokers, including Mofid Securities – first ranked broker in the TSE with 23.11 percent of trading, Agah Brokerage Company with 6.08 percent, Agricultural Bank with 3.49 percent, Amin Avid Brokerage with 2.64 percent, Melli Bank with 2.27 percent, and Hafez Brokerage Company with 2.19 percent, SENA reported.

The report further mentioned that of the total transactions at the equity market, more than 165 trillion rials has been transferred electronically, accounting for 18.6 percent of the total volume.

Despite concerns over the future of the economy raised by the potential budget deficit for the next fiscal year, some of the financial institutions including brokers are negotiating with respective financial institutions overseas to attract direct foreign investment for Iran’s equity market, analysts said.