Weekly Market Report

Trading Week: 6 - 9 August 2017

Summary

Main Topics

- Tehran Stock Exchange recovers to one-year high

- IFB slips 0.8% with most trades in equities

- Iran signs a EUR 660 million deal to produce more Renault cars

 

Tehran Stock Exchange

The Tehran Stock Exchange All-Share Index added 0.4% over the week, recovering from last week’s slight decline to regain one-year highs, closing at 81,579. Transportation & Logistics (+11%) led gainers among sectors in the trading week ending August 9, boosted by strong market demand for Islamic Republic of Iran Shipping Lines (KSHJ +12.5%). Last week a block including 3% of its shares was transferred to a private company by the state shareholders, triggering investors’ sudden interest in the shipping company. Base Metals (+2.8%) continued to advance, establishing itself as the top performing sector since late June with gains of just over 25% on the back of gains in steel, lead, zinc and copper com­panies. The weakest sector over the week was Ceramic & Tiles (-3.3%).

 

The TSE30 index of the thirty largest companies by market capitalization rose for the fifth straight week, adding 0.8% to close at 3,271. Iran Shipping Lines (KSHJ +12.5%) rose the most in the top 30s, while the biggest faller was MAPNA Group (MAPN -2.2%).

 

The Average Daily Trade Volume (ADTV) increased 0.9% to USD 51.4 million in the four-day trading week, with the market closed last Saturday due to the inauguration of Presi­dent Rouhani. The stocks most traded by value were Esfahan Mobarakeh Steel Co. (FOLD +3.4%), Behpardakht Mellat Co. (PRKT -3.5%) and National Iranian Copper Indus­tries Co. (MSMI +2.1%) with volumes of USD 7.6 million, USD 3.4 million and USD 3.2 million respectively.

 

Iran Fara Bourse

The Iran Fara Bourse overall index slipped 0.8% to end the week at 924, while its ADTV dropped 18% to USD 30 million. Equities replaced debt securities as the most traded in­struments on the IFB this week, recording total trades of USD 58 million.

 

Foreign Exchange Market

The Central Bank of Iran continued to increase the official rate of the US dollar, quoting it at IRR 32,837 for a gain of 0.2% over the week. On the free market the dollar slipped 0.2% to IRR 38,040. The euro’s official rate was set 0.7% higher at IRR 38,544 while its free market rate dropped 0.4% to IRR 44,956. The official rate of British pound was set 1.5% lower at IRR 42,668 and on the free market it fell 1.2% to IRR 49,100.

 

Economic Developments

Iran and French car maker Renault signed a new deal on Monday to develop production of Renault cars in Iran. According to the first phase of this joint venture deal, EUR 660 mil­lion will be invested by the two parties to produce 150,000 cars from October. The second phase is to start in 2019 although details have not been finalized, according to Iranian me­dia. The deal was signed between Renault (60%), the Industrial Development and Reno­vation Organization of Iran (IDRO) and private local automobile company Negin Khodro (each holding 20%). It was disclosed that 30% of the new production capacity is intended for export. The Renault models to be produced are the New Symbol and New Duster.

 

Since the removal of nuclear related sanctions, Renault has returned to the Iranian mar­ket, competing with its French rival Peugeot.  In the first four months of the current Iranian year to July 22, Renault’s output in Iran increased 52% to 42,686 vehicles, with growth mainly driven by production of the Sandoro model. Peugeot’s output gained only 4% over the same period to 133,286 cars. Production of new Peugeot models in Iran has not be­gun yet, with a new model expected to be presented by the end of the current Iranian year in March 2018.

 

Automobile manufacturing has become a leading industry in Iran under Hassan Rouhani’s presidency. Total vehicle production in the last Iranian year ending March 2017 grew 37% to 1.3 million units, and several deals were signed with international car makers. Iran aims to boost employment levels by producing vehicles under joint venture deals, mostly with European manufacturers. It is also targeting the regional market to diversify export reve­nues. But currency risk remains a key risk factor in developing the car industry through joint venture deals with European manufacturers. The Iranian rial has dropped 11.4% against the euro since the start of the current Iranian year on March 21, 2017, making Eu­ropean products less affordable for Iranians.

FX Information

Description

10 August 2017

3 August 2017

% Change

Official USD - IRR

32,837

32,771

0.2

Market USD - IRR

38,040

38,098

(0.2)

Official EUR - IRR

38,544

38,814

(0.7)

Market EUR - IRR

44,956

45,142

(0.4)

Official GBP - IRR

42,668

43,320

(1.5)

Market GBP - IRR

49,100

49,700

(1.2)

Market Information

Index Info

Close

Unit Change

% Change

%  Change from March 20, 2017

TSE Overall Index - TEDPIX

81,579

313

0.4

6.3

TSE30 Index

3,271

24

0.8

6.3

Iran Fara Bourse Overall Index

924

(7)

(0.8)

5.6

Description

This Period

Last Period

Market P/E

7.0

6.9

Trade Statistics

Description

This Period

Last Period

% Change

TSE Average Daily Trade Vol­ume (Million USD) **

51.4

51.0

0.9

IFB Average Daily Traded Val­ue (Million USD) **

30

37

(18)

Industry Index Information

Description

Close

% Change

Transportation & Logistics

3,706

11.0

Agriculture

7,511

7.2

Wooden Products

61,070

3.0

Base Metals

40,962

2.8

Metallic Ore

14,714

1.7

Coal Mining

1,436

0.8

TSE All-Share Index

81,579

0.4

Utility Service Providers

196

0.4

Sugar

9,197

0.1

Non-Metallic Ores

2,455

0.03

Metallic Products

30,715

0.0

Leather Production & Products

1,789

0.0

Medical & Measurement Products

10,244

0.0

Oil Drilling & Services

604

0.0

Engineering Services

693

(0.03)

Chemicals

4,695

(0.03)

Construction

779

(0.1)

Banking

574

(0.2)

Telecommunication

949

(0.2)

Oil Products

221,328

(0.3)

Foods excluding Sugar

3,804

(0.3)

Automotive

18,192

(0.4)

Industrial Conglomerates

7,591

(0.4)

Pharmaceuticals

9,159

(0.4)

IT

12,904

(0.4)

Investment

1,906

(0.5)

Rubber & Plastics

22,757

(0.8)

Other Financial Services

2,359

(0.8)

Machinery & Electric Equipment

509,539

(1.0)

Paper Products

12,632

(1.1)

Machinery & Equipment

16,107

(1.3)

Textile

1,356

(1.5)

Insurance

5,079

(1.7)

Cement

720

(1.7)

Printing & Publishing

179,600

(2.7)

Ceramics & Tiles

2,370

(3.3)

Mining

15,758

(3.4)

TSE Top 5 Gainers

Company

Close **

(USD Cents)

% Change

FRVR

Iran Mineral Processing Co.

27.2

16.9

BAFG

Bafgh Mining Co.

36.1

13.4

KSHJ

IRI Shipping Lines

9.6

12.5

PSIR

Iran Glass Wool Co.

15.8

11.1

PNTB

Tabriz Oil Refining Co. 

13.1

5.1

TSE Top 5 Value Leaders

Company

Close **
(USD Cents)

Trade Value **

(Million USD)

FOLD

Esfahan Mobarakeh Steel Co.

4.6

7.6

PRKT

Behpardakht Mellat Co.

58.8

3.4

MSMI

National Iranian Copper Ind. Co.

5.0

3.2

FKHZ

Khouzestan Steel Co.

10.3

2.6

PNTB

Tabriz Oil Refining Co.

13.1

2.5

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

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