Weekly Market Report

Trading Week: 30 Dec - 3 Jan, 2018

Summary

Main Topics

· Stocks post first weekly loss in a month

· Rial falls as gap widens between market and official rates

· Producer Price Index rises 1.5% in December

 

Tehran Stock Exchange

The TSE Overall Index (TEDPIX) fell 2% to 95,929, posting its first weekly decline in four weeks. The TSE30 ended 1.9% down to trim its return since March to 36.4%, compared with gains of 25% for the TEDPIX. The average daily trading value rose 12% to USD 72 million. The market saw losses across the board, with Telecommunication the only major sector to end the week higher. 

 

The Automotive index fell 6.4% following a 2.7% decline last week. Iran Khodro Co. (IKCO), the largest Iranian car maker, lost 6% and ended the week with a market cap of just below USD 1 billion. SAIPA (SIPA), the second largest car maker, fell 5.5%. Car mak­ers have increased their sales prices but still face such challenges as higher production costs and low purchasing power of customers. This week the Traffic Police announced that it will stop issuing license plates for sub-standard models. However, the announce­ment is not unprecedented and in the past it continued issuing license plates as halting production of tens of thousands of cars is not easy in practice.

 

Iran Tractor Forging Co. (ATIR) added 0.9% as one of the few companies in the Automo­tive sector to post gains this week. ATIR, a components producer with a market cap of USD 177 million, is up 22% over 30 days. Imported materials account for nearly half of its raw materials while it sells almost all its products to domestic car makers. ATIR doubled its sales in the first half of the fiscal year ending in March 2018 while production increased 22% compared to the same period last year.

 

Chemicals fell 1.7%. Most stocks were down, including the three large-cap holding com­panies:  Persian Gulf Petrochemical Co. (PKLJ -1.7%), Tamin Petroleum and Petrochemi­cal Investment Co. (PTAP -2.2%), and Parsian Oil & Gas Development Co. (PASN -2.0%). Jam Petrochemical Co. (PJMZ) was an exception and rose 0.7%. PJMZ is the sec­ond largest listed olefin producer with a market cap of USD 2 billion.

 

Base Metals fell 1.6% although some constituents managed to end the week higher. Na­tional Iranian Copper Industries Co. (MSMI), the largest copper producer with a market cap of USD 3.5 billion, rose 1%. MSMI generates more than half of its revenues from ex­ports of copper and benefits from a weaker rial. Calcimin Co. (KSIM), a main zinc and lead producer, resumed trading after updating its EPS estimate and climbed 7.2%. KSIM was the second top gainer of the week.

 

Oil Products fell 3.1%, leaving the index still up 76% over 12 months. There were rumors of a smaller hike in fuel prices to reduce inflationary pressures, but the government reject­ed the idea. Moreover, changes in fuel prices have no direct effect on the business of re­fineries. Refineries buy crude oil from the government and sell back most of their products based on global prices and the official exchange rate.

 

Telecommunication stood out among major sectors to gain 0.5%. Telecommunication Company of Iran (MKBT) rose 0.4% and ended the week with a market cap of USD 3.1 billion. MKBT resumed trading this week after holding an extraordinary meeting of share­holders which gave its backing for a 10% capital increase via a rights issue. The board of directors is likely to approve the plan on January 14.

 

The TSE published a list of 13 TSE-listed companies that are suspended from trading and may be delisted. These companies are required to either publish audited financial state­ments or clarify some important issues affecting their share prices. Five companies on the list are banks: Pasargad Bank (BPAS), Saderat Bank (BSDR), Tejarat Bank (BTEJ), Par­sian Bank (BPAR), and Post Bank (BPST). A number of other companies, such as Sina Bank (VSIN) and IKCO, received a notice for similar reasons. The Banking index fell 0.6% this week. Another company named is HiWeb (HWEB) which held its IPO in September. HWEB was suspended three weeks ago because of questions about a recent acquisition. 

 

Iran Fara Bourse

The IFB Overall Index fell 2.5% despite a 1.5% gain in its largest constituent, Marun Pet­rochemical Co. (PMRZ). Esfahan Steel Co. (ZOBZ), a steel rebar and profiles producer, fell 2.5%. There were rumors that the government is trying to divest its stake in ZOBZ, possibly to Esfahan Mobarakeh Steel Co (FOLD), the main flat products producer listed on the TSE. The Social Security Organization is the main shareholder in ZOBZ, holding 56%. A pension fund, whose members are retired employees of the once state-owned steel industry, holds a further 16.8%. ZOBZ recently received a notice of suspension as it has been loss-making for two consecutive years.

 

Foreign Exchange Market

The rial weakened against major currencies. The dollar rose 3.8% in one week and ended at a record  IRR 43,382. The gap between the market and official rates widened again as the Central Bank of Iran (CBI) kept the official rial-usd rate almost unchanged at IRR 36,091. Speculation also hit the popular domestic gold coin market. In response to a sud­den increase in demand, the CBI restarted its daily auction of gold coins.  

 

 

Economic Development

The Producer Price Index (PPI) increased 1.5% in December from November, the CBI reported. The PPI was up by 10.7% on a year-on-year basis, compared to 11.3% in No­vember. Data issued last week showed that the Consumer Price Index rose 1.9% in De­cember and that the annual inflation rate had risen to 10% from 9.6%.

 

Trading may soon be allowed in Justice Shares, according to the chair of parliament’s economics commission. The government is expected to submit a bill in two weeks. Justice Shares are shares of once state-owned companies which were privatized nearly a decade ago and distributed among millions of low income people, but could not be traded. Provin­cial Justice Companies already represent the Justice Shares on the boards of directors of privatized companies. 

FX Information

Description

4 January 2018

28 December 2017

% Change

Official USD - IRR

36,091

36,074

0.05

Market USD - IRR

43,382

41,780

3.8

Official EUR - IRR

43,372

42,979

0.9

Market EUR - IRR

52,916

49,865

6.1

Official GBP - IRR

48,798

48,410

0.8

Market GBP - IRR

57,852

56,978

1.5

Market Information

Index Info

Close

Unit Change

% Change

%  Change from March 20, 2017

TSE Overall Index - TEDPIX

95,929

(1,969)

(2.0)

25.0

TSE30 Index

4,196

(82)

(1.9)

36.4

Iran Fara Bourse Overall Index

1,055

(27)

(2.5)

20.6

Description

This Period

Last Period

Market P/E

7.3

7.5

Trade Statistics

Description

This Period

Last Period

% Change

TSE Average Daily Trade Vol­ume (Million USD) **

72

64

12

IFB Average Daily Traded Val­ue (Million USD) **

34

36

(5)

Industry Index Information

Description

Close

% Change

Wooden Products

54,696

5.8

Other Financial Services

2,214

5.0

Utility Service Providers

241

0.6

Telecommunication

1,103

0.5

Printing & Publishing

208,282

0.2

IT & Communications

231

0.0

Medical & Measurement Products

10,244

0.0

Mining

12,058

0.0

Textile

1,266

(0.3)

Leather Production & Products

2,018

(0.4)

Banking

579

(0.6)

IT

11,894

(1.1)

Base Metals

57,857

(1.6)

Chemicals

5,956

(1.7)

Machinery & Electric Equipment

474,505

(1.8)

Transportation & Logistics

3,854

(1.8)

Industrial Conglomerates

9,323

(1.9)

TSE All-Share Index

95,929

(2.0)

Metallic Ore

19,604

(2.1)

Pharmaceuticals

8,645

(2.7)

Insurance

4,607

(3.1)

Oil Products

347,135

(3.1)

Financial Markets Management

72

(3.3)

Foods excluding Sugar

3,360

(4.1)

Investment

2,029

(4.2)

Engineering Services

735

(4.2)

Cement

594

(4.3)

Sugar

8,646

(4.6)

Agriculture

6,289

(4.8)

Non-Metallic Ores

2,192

(4.9)

Construction

656

(5.8)

Automotive

16,498

(6.4)

Metallic Products

23,475

(7.1)

Rubber & Plastics

19,379

(7.3)

Machinery & Equipment

14,742

(7.8)

Coal Mining

1,278

(8.4)

Oil Drilling & Services

410

(9.2)

Ceramics & Tiles

1,836

(9.5)

Paper Products

10,647

(10.2)

TSE Top 5 Gainers

Company

Close **

(USD Cents)

% Change

SEPP

Sepahan Oil Co.

32.6

7.6

KSIM

Calcimine Co.

12.6

7.2

FIBR

Fibre Iran Co.

8.6

5.8

VSIN

Sina Bank

2.3

3.5

NASI

Iran Refractories Co.   

8.9

2.2

TSE Top 5 Value Leaders

Company

Close **
(USD Cents)

Trade Value **

(Million USD)

FOLD

Esfahan Mobarakeh Steel Co.

6.8

24.0

PNES

Esfahan Oil Refining Co. 

10.6

11.7

MSMI

National Iranian Copper Ind. Co.

5.8

9.0

PTEH

Tehran Oil Refining Co.

9.4

7.7

SIPA

SAIPA Group

2.2

7.2

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

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