Weekly Market Report

Trading Week: 10 –14 Feb, 2018

Summary

Main Topics

· Commodity and Automotive sectors gain as TEDPIX ends little changed

· Rial falls in a volatile week; CBI blames speculators

· CBI to let banks issue bonds to stabilize rial

· Government supports raising fuel prices and returning to old quota system 

 

Tehran Stock Exchange

The TSE Overall Index (TEDPIX) closed almost unchanged from last week at 98,347. The average daily trading value fell 27% to USD 45 million in a week shortened by a public holiday on Feb 11. Commodity sectors were positive, with Chemicals, Base Metals, Metal­lic Ore, and Oil Products all advancing. The Automotive sector, which is sensitive to for­eign relations, also gained. TSE30 index closed up 0.2% for the week, reflecting its higher exposure to large cap commodity stocks. The TSE30 is up 41.8% since last March, against 28.2% for the TEDPIX.

 

The Detergent Industry Management of Behshahr Industries Development Co. (SHOY) climbed 26% in its first week after its IPO, taking its post-IPO return to 33%. SHOY fre­quently hit the 5% daily limit, prompting the TSE to temporarily suspend its ticker on Tues­day and ask for disclosure of any significant information. SHOY filed a disclosure to say there was none and that the gains were related to market conditions. SHOY jumped 10% after resuming trading on Wednesday. It is common for Iranian IPOs to hit the maximum daily limit for several days or even weeks after the IPO. The demand for IPOs is so high that the TSE or IFB normally set a quota for individual investors.

 

Automotive rose 2.7%, the best performance among the major indices. Most car makers and auto parts producers advanced. Iran Khodro Co. (IKCO), the largest Iranian car mak­er, added 2.2%. IKCO filed a disclosure this week, rejecting what it called a “fabricated letter” about the sale of nearly 16% of its shares by a major shareholder. The “letter” was circulating on social networks. SAIPA (SIPA), the second largest car maker, advanced 3.2%.  

 

Metallic Ore added 0.8%. Golgohar Mining & Industrial Co. (GOLG), a main iron ore sup­plier for domestic producers, rose 1.7%. Chadormalu mining & industrial co. (CHML), the other major iron ore supplier, was up 0.5%.

 

Base Metals rose 0.3%. Mobarakeh Steel Co. (FOLD), the largest maker of hot rolled steel products, gained 0.8%. FOLD raised its full-year earnings for the fiscal year ending March 20 by 26% to IRR 51.5 trillion (approx USD 1.1 billion), mainly on higher sales pric­es.

 

Chemicals added 0.3%. Pardis Petrochemical Co. (PRDZ), the largest urea fertilizer pro­ducer, advanced 4.6%. Kermanshah Petrochemical Co. (PKER), a smaller producer of urea fertilizer, added 0.8%. Urea/ammonia producers could experience a wider profit mar­gin as the cost of production by natural gas is linked to the average market price of natural gas in major hubs and also the official exchange rate. The sales prices for most of their products are based on the market exchange rate. The gap between the two rates has wid­ened to 27%.

 

The gains in commodities and automotive sector were offset by declines in a number of other major industries, including Telecommunication (-0.3%), Banking (-0.6%), Pharma­ceuticals (-1.5%), and Engineering Services (-4.6%). MAPNA Group (MAPN), the main power plant builder and operator with a market cap of USD 1.5 billion, declined 4.7%. MAPN is by far the largest constituent of Engineering Services index.

 

Iran Fara Bourse

The IFB Overall Index rose 0.4% to extend its gain since March 2017 to 26.6%. Zagros Petrochemical Co. (PZGZ), a methanol exporter, rose 3.1%. Lavan Oil Refining Co. (PNLZ) and Shiraz Oil Refining Co (PRZZ), the two IFB-listed refineries, were down 3.4% and 1.2% respectively. World benchmarks for crude oil declined during the week, with the WTI falling below USD 60 per barrel.

 

Hormozgan Steel Co. (FOHZ), a steel slab producer which sells more than 70% of its products overseas, rose 4%.  FOHZ raised its full-year earnings estimate for the current fiscal year (ending March 20) by 27% to IRR 3 trillion (approx. USD 63 million) due to in­creases in volumes and market prices of its exports. 

 

Foreign Exchange Market

The rial fell in a week of volatile trading, prompting the CBI to introduce new tools to stabi­lize the foreign exchange market. The dollar’s market exchange rate ended 2.0% higher at IRR 47,204, having touched IRR 49,000. The gap between the market and official rates has widened to almost 27% as the CBI raised the official rial-usd exchange rate by only 0.3% to IRR 37,091.

 

To manage the volatile exchange rates, the Central Bank of Iran (CBI) announced that it will let banks issue high-yield rial bonds for two weeks and also rial-denominated bonds whose value is linked to the US dollar. The CBI also said that a limited number of individu­als have been the main buyers of foreign currencies in recent days and it had informed the National Tax Administration to take appropriate action. 

 

Economic Development

The government appears to support the idea of raising fuel prices while returning to the old quota system. If parliament approves, the price of fuel would increase in multiple steps but the price for a certain level of consumption would be cheaper. The government termi­nated the quota system nearly two years ago.

 

The CBI allowed banks to temporarily raise the ceiling on daily cash withdrawals from ATMs to IRR 5 million (approx. USD 106) from IRR 2 million ahead of the Iranian New Year on March 20. Banks should return to the IRR 2 million limit in the first week of April. For years the daily cash limit has remained at IRR 2 million while inflation has often re­mained above 10%.

FX Information

Description

15 February 2018

8 February 2018

% Change

Official USD - IRR

37,091

36,979

0.3

Market USD - IRR

47,204

46,289

2.0

Official EUR - IRR

46,233

45,318

2.0

Market EUR - IRR

59,459

57,861

2.8

Official GBP - IRR

51,997

51,294

1.4

Market GBP - IRR

68,299

67,708

0.9

Market Information

Index Info

Close

Unit Change

% Change

%  Change from March 20, 2017

TSE Overall Index - TEDPIX

98,347

48

0.05

28.2

TSE30 Index

4,363

9

0.2

41.8

Iran Fara Bourse Overall Index

1,108

4

0.4

26.6

Description

This Period

Last Period

Market P/E

7.5

7.5

Trade Statistics

Description

This Period

Last Period

% Change

TSE Average Daily Trade Vol­ume (Million USD) **

45

62

(27)

IFB Average Daily Traded Val­ue (Million USD) **

34

44

(23)

Industry Index Information

Description

Close

% Change

Construction

686

3.7

Automotive

16,992

2.7

Paper Products

10,985

2.3

Cement

587

1.0

Machinery & Electric Equipment

484,912

0.9

Metallic Ore

20,374

0.8

Insurance

4,430

0.7

Rubber & Plastics

19,156

0.7

Investment

2,045

0.4

Chemicals

6,355

0.3

Oil Products

358,214

0.3

Base Metals

60,153

0.3

IT

12,625

0.2

Ceramics & Tiles

1,801

0.1

TSE All-Share Index

98,348

0.03

IT & Communications

231

0.0

Medical & Measurement Products

10,244

0.0

Mining

12,058

0.0

Textile

1,260

0.0

Transportation & Logistics

3,647

(0.04)

Industrial Conglomerates

9,823

(0.2)

Telecommunication

1,117

(0.3)

Leather Production & Products

1,992

(0.3)

Metallic Products

22,406

(0.4)

Banking

552

(0.6)

Wooden Products

75,211

(0.8)

Non-Metallic Ores

2,242

(1.0)

Utility Service Providers

230

(1.1)

Foods excluding Sugar

3,297

(1.5)

Machinery & Equipment

16,709

(1.5)

Pharmaceuticals

8,382

(1.5)

Financial Markets Management

73

(2.0)

Oil Drilling & Services

391

(2.1)

Sugar

9,160

(2.3)

Other Financial Services

2,194

(2.5)

Coal Mining

1,692

(4.2)

Engineering Services

693

(4.6)

Agriculture

5,864

(4.6)

Printing & Publishing

204,014

(6.6)

TSE Top 5 Gainers

Company

Close **

(USD Cents)

% Change

SHOY

Behshahr Industrial Dev. Corp.

7.7

26.3

RINM

Mashhad Wheel Mfg. Co.

2.6

12.4

PLKK

Plasco Car Saipa Co.

2.1

10.1

PELC

Pars Electric Manufacturing Co.

8.1

8.4

SSAP

SAIPA Investment Group

1.4

6.4

TSE Top 5 Value Leaders

Company

Close **
(USD Cents)

Trade Value **

(Million USD)

PKOD

Pars Khodro

1.9

4.1

ZMYD

Zamyad Co.

1.7

3.6

FOLD

Esfahan Mobarakeh Steel Co.

6.3

3.3

PKLJ

Persian Gulf Petrochem. Ind. Co.

11.9

3.2

SPDZ

Saipa Diesel Co.

1.8

3.1

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

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