Weekly Market Report

Trading Week: 7 – 11 October 2017

Summary

Main Topics

· Stocks decline and dollar appreciates ahead of Trump’s decision on Iran agreement.

· Senior US senator clashes with Trump, raising chances that nuclear deal will survive.

· IMF expects Iran to grow faster than regional average over next five years.

 

Tehran Stock Exchange

Stock prices declined across the board this week on growing expectations that US Presi­dent Donald Trump will decertify Iran’s compliance with its nuclear agreement by the Oc­tober 15 deadline set by Congress. However the market showed signs of stabilizing to­wards the end of the trading week, with Trump’s decision not expected to mean the end of the agreement.

 

The TSE Overall Index (TEDPIX) fell 0.8 percent for the week ending October 11. Almost all major sectors fell, except for Chemicals, Base Metals, and Telecom. Car makers, which rely on imported parts and are generally sensitive to foreign relations, fell for a second week in high volumes. The Automotive index fell 5.9%, extending its decline over one year to nearly 25%. Higher steel prices are another headwind. Car makers usually apply for an increase in sales prices in response to higher costs, but even when they get approval they still need to consider the impact of higher prices on demand.

 

Chemicals rose 1% for the week. The heavily weighted sector played a large part in limit­ing the decline of the TEDPIX. Persian Gulf petrochemical, the largest listed company by market capitalization, gained 3%.

 

Base Metals rose by 0.6% as the sector is expected to benefit from the recent apprecia­tion of the US dollar and the increase in domestic prices. Some suppliers increased their price for steel billets between 2.5% to 3.6% on Tuesday, as reported by media. National Iranian Copper Industries added 4%. Mobarakeh Steel declined 0.3% but is still up 30% over three months.

 

Iran Fara Bourse

The IFB Overall Index fell 2.3%, trimming its return since March to 6.2%. The index fell for the first two trading days but regained some ground over the rest of the week. Despite market weakness, Iran & Shargh Leasing Company held its IPO, becoming the market’s seventh IPO since March. The company saw strong demand and gained 21.4% over the week after hitting the daily limit of 5% each day. 

 

Foreign Exchange Market

The US dollar gained 2.1% to just over IRR 40,000, although rates may vary depending on the source. The official rate increased 0.4 percent to IRR 34,149. Some exchange houses reportedly refused to quote the rate, suggesting they found it difficult to balance supply and demand. The market for hard currency is usually more volatile. However, as we noted last week, reaction to Trump’s pending decision has been limited, with the mar­ket apparently not expecting a worst case scenario.

 

Economic Development

Iran’s GDP is projected to grow faster than the regional average over the next five years, according to latest estimates from the International Monetary Fund (IMF). In its semi-annual World Economic Outlook, the IMF estimates real growth of 3.5% this year and 3.8% in 2018. It forecasts annual growth of 4.1% from 2019 to 2022. The IMF’s estimate of Iran’s 2016 GDP growth was revised upward to 12.5%, which is nearly double the last estimate made in April 2017. However its projections for 2018 and 2019-2022 were re­vised downwards.

 

Even with those revisions, the IMF still expects a faster growth rate for Iran compared to the region. The IMF is forecasting average growth rates for the Middle East, North Africa, Afghanistan and Pakistan of 2.6% in 2017, increasing to 3.5% in 2018, and an annual 3.8% from 2019 to 2022. Turkey, which is listed under Emerging and Developing Europe, is expected to grow by 5.1%, 3.5%, and 3.6% for those periods.

 

Iran’s inflation rate is expected to remain close to 10% this year and 2018. Inflation has fallen substantially over the past four years but remains above regional and global averag­es.

FX Information

Description

12 October 2017

5 October 2017

% Change

Official USD - IRR

34,149

34,002

0.4

Market USD - IRR

40,198

39,375

2.1

Official EUR - IRR

40,552

39,980

1.4

Market EUR - IRR

47,708

46,469

2.7

Official GBP - IRR

45,263

45,038

0.5

Market GBP - IRR

53,300

52,400

1.7

Market Information

Index Info

Close

Unit Change

% Change

%  Change from March 20, 2017

TSE Overall Index - TEDPIX

84,744

(685)

(0.8)

10.4

TSE30 Index

3,455

(26.8)

(0.8)

12.3

Iran Fara Bourse Overall Index

929

(21.4)

(2.3)

6.2

Description

This Period

Last Period

Market P/E

6.8

6.8

Trade Statistics

Description

This Period

Last Period

% Change

TSE Average Daily Trade Vol­ume (Million USD) **

52

53

(2)

IFB Average Daily Traded Val­ue (Million USD) **

59

112

(47)

Industry Index Information

Description

Close

% Change

Medical & Measurement Products

1,017.3

11.0

Chemicals

49.4

1.0

Sugar

71.3

0.8

Telecommunication

8.1

0.8

Base Metals

246.9

0.6

Utility Service Providers

0.5

0.2

Leather Production & Products

0.0

0.0

Textile

(0.2)

(0.02)

Industrial Conglomerates

(34.2)

(0.4)

Banking

(2.8)

(0.5)

TSE All-Share Index

(685.4)

(0.8)

Machinery & Equipment

(150.9)

(0.9)

Pharmaceuticals

(90.6)

(1.0)

Rubber & Plastics

(300.0)

(1.4)

Transportation & Logistics

(59.7)

(1.4)

Investment

(27.9)

(1.4)

Machinery & Electric Equipment

(7,336.7)

(1.5)

Oil Products

(4,303.1)

(1.7)

Construction

(11.9)

(1.7)

Metallic Products

(564.7)

(1.8)

Engineering Services

(13.6)

(2.0)

Cement

(13.9)

(2.1)

IT & Communications

(3.7)

(2.2)

Insurance

(121.3)

(2.4)

Printing & Publishing

(5,175.9)

(2.6)

Coal Mining

(33.8)

(2.6)

Other Financial Services

(59.8)

(2.7)

Metallic Ore

(469.0)

(2.8)

Foods excluding Sugar

(128.0)

(3.5)

IT

(467.4)

(3.7)

Paper Products

(544.3)

(4.2)

Non-Metallic Ores

(103.2)

(4.5)

Ceramics & Tiles

(132.6)

(5.9)

Automotive

(1,012.9)

(5.9)

Oil Drilling & Services

(28.3)

(6.2)

Mining

(872.5)

(7.1)

Agriculture

(504.6)

(7.2)

Wooden Products

(5,404.9)

(9.9)

TSE Top 5 Gainers

Company

Close **

(USD Cents)

% Change

LEAB

Loabiran Co.

12.1

10.3

KFAN

Fanar Sazi Khavar Co.

11.0

9.1

 NALM

Navard Aluminum Mfg. Co.

3.5

9.0

PIAZ

Piazar Agro Industrial Co.

13.2

3.2

SKER

Kerman Cement Co.

5.0

2.9

TSE Top 5 Value Leaders

Company

Close **
(USD Cents)

Trade Value **

(Million USD)

HWEB

Hi Web

11.2

14.8

APPE

Asan Pardakht Persian Co.

33.5

7.4

SIPA

SAIPA Group 

2.6

6.0

ALIR

Iran Aluminum Co.

4.4

5.1

PRKT

Behpardakht Mellat Co.

45.9

4.8

** All figures in USD are converted from IRR at the free market rate

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