Weekly Market Report

Trading Week: 24 – 28 Feb, 2018

Summary

Main Topics

· Different FX rates quoted as CBI becomes more active in the market

· TEDPIX falls 0.2%; still relatively stable despite volatile FX market

· Consumer Price Index rises 0.9% in February from January

· CBI calls for a ban on dollar-based imports

· Average price of Tehran apartments rises 22% year-on-year

 

Tehran Stock Exchange

The TSE Overall Index (TEDPIX) dropped 0.2% to close at 97,961, remaining relatively stable over the week considering the volatility of the foreign exchange market and a tem­porary increase in the bank deposit rate aimed at reducing speculation in FX rates. Even the Automotive sector, which is sensitive to foreign relations and FX rates, gained 1% and was the best performing index among the major industries. Base Metals (+0.9%) and Tel­ecommunication (+0.9%) also gained, while the indices of some other large cap industries declined, including Metallic Ore (-0.3%), Chemicals (-0.6%), Engineering Services (-1.7%), and Oil Products (-2.3%).

 

The TSE30 managed to gain 0.1%. The index is up 41.4% since March compared to 27.7% for the TEDPIX. The average daily trading value slipped 1.2% to USD 79 million.

 

Saipa Diesel Co. (SPDZ), the main truck maker, continued rising and added another 19% to bring its return for February to 70%. Speculation about the possible sale of Iranian truck makers to foreign car makers intensified after the Minister of Industry, Mining and Trade said in mid-February that it was ready to accept foreign ownership of above 50% in Iranian automotive firms. Despite all speculation and the sharp increase in its share price, SPDZ said last week that it had no important news to disclose.  SAIPA (SIPA), the second larg­est car maker and a shareholder of SPDZ, rose 1.5%, bringing its one-month gain to 6.1%. Iran Khodro Diesel Co. (KAVR), another truck maker, added 6.5% over the week. The majority of companies in the Automotive sector also gained.

 

Tehran Oil Refining Co. (PTEH) fell 3.9%. PTEH raised its full-year earnings forecast for the fiscal year ending March 20 to USD 266 million, up 24% from its last estimate two months ago. Changes in prices of crude oil (cost) and oil products (revenue) was the rea­son for the upward adjustment of net income. Bandar Abbas Oil Refining Co. (PNBA) de­clined 1.5%. PNBA’s 9-month results for the fiscal year ending March 20 showed revenue of USD 3.4 billion and net income of USD 277 million, up 37% and 119% respectively, compared to the same period last year.

 

Khouzestan Steel Co. (FKHZ), a main steel slab, bloom, and billet producer, rose 2.6%. FKHZ raised its full-year earnings forecast for the fiscal year ending March 20 by 11.8% from its previous estimate to USD 342 million. The last estimate was made nearly one month ago. Increases in both volume and average sales prices lifted profits, according to the company’s filing. Mobarakeh Steel Co. (FOLD), the largest hot rolled steel producer, gained 2.8%.

 

The Detergent Industry Management of Behshahr Industries Development Co. (SHOY) declined 5.4%, trimming its post-IPO return to 26%. SHOY, a holding of detergents, soap, shampoo and toothpaste suppliers, held its IPO on February 6.

 

Iran Fara Bourse

The IFB Overall Index fell 0.4% despite a 1.2% gain in its largest constituent, Marun Pet­rochemical Co. (PMRZ). IFB-listed chemical companies were mixed. Methanol producer Zagros Petrochemical Co. (PZGZ), fell 3.3%. Market prices of methanol declined this week in Europe and Asia. In China, methanol dropped USD 7 a tonne to USD 359 (CFR). Methanex, the world’s largest supplier, has reportedly cut its Asian price for March con­tract by $20.

 

Utility producers, which are sensitive to both inflation and the official exchange rate be­cause of pricing formula, were also mixed this week. Asaluyeh Power Plant – MAPNA LLP (BMAZ), a subsidiary of TSE-listed MAPNA Group Co. (MAPN), declined 4.2% while Damavand Power Generation Co. (BDMZ), a subsidiary of Day Bank, added 3.5%. The Central Bank of Iran (CBI) raised the official exchange rate of the dollar while a report this week showed year-on-year inflation was 9.4% in February.

 

Foreign Exchange Market

Exchange houses were quoting different exchange rates days after the CBI started new measures to calm currency speculation. The CBI was reportedly injecting hard currency at a dollar rate below IRR 45,000, according to a number of official and semi-official news agencies. Supply was limited, resulting in long queues in front of some exchange houses. Many exchanges however quoted IRR 44,586 at the end of the week although their supply may be limited at this rate. Others were reportedly ready to sell at around IRR 47,000, still below record highs of about IRR 49,000 before the recent CBI intervention. The CBI raised its own official dollar rate by 0.3% to IRR 37,339.

 

It was the second week that the CBI allowed banks to raise the one-year deposit rate to 20% from 15%. The program was due to end on March 1. The CBI also sold certificates of deposit in rial terms with the value linked to the US dollar or euro. Another measure was forward contracts of gold coins. CBI Governor Valiollah Seif said there was little demand for foreign currency-linked deposits and gold coins.  

 

In the latest development, the CBI wrote to the Ministry of Industry, Mining and Trade, urg­ing it to stop accepting applications for imports based on the US dollar. The CBI argues that, considering the challenges still faced by banks, importers essentially need to go to exchange houses for dollar payments. The CBI’s policy is to move towards bank-based transactions and elimination of the dollar from bilateral payments.

 

Economic Development

The Consumer Price Index (CPI) rose 0.9% in February from the previous month, the CBI reported. On a year-on-year basis, the CPI fell to 9.4% from 9.7% the previous month. The 12-month average of the CPI, a popular measure of inflation in Iran which smooths monthly fluctuations, was reported at 9.9% in February compared to 10% the previous month.  

 

The Foods & Drinks sub-index, which accounts for 26% of the CPI, rose 1.3% from the prior month and was up 11.5% from February last year. The Producer Price Index in­creased 1.1% from January to February and was up 11.9% on a year-on-year basis, ac­cording to a separate report.

 

The number of transactions in Tehran’s apartments market reached 18,400 units in Febru­ary, the CBI reported. This was 3.2% lower than in January but still up 17.7% on a year-on-year basis. The average sale price of apartments was IRR 55 million (about USD 1,234) per square meter in February, up 5.1% from January and 22.3% higher than February last year.

FX Information

Description

1 March 2018

22 February 2018

% Change

Official USD - IRR

37,330

37,210

0.3

Market USD - IRR

44,586

45,214

(1.4)

Official EUR - IRR

45,517

45,682

(0.4)

Market EUR - IRR

54,886

55,588

(1.3)

Official GBP - IRR

51,317

51,764

(0.9)

Market GBP - IRR

67,441

66,455

1.5

Market Information

Index Info

Close

Unit Change

% Change

%  Change from March 20, 2017

TSE Overall Index - TEDPIX

97,961

(195)

(0.2)

27.7

TSE30 Index

4,351

5

0.1

41.4

Iran Fara Bourse Overall Index

1,092

(5)

(0.4)

24.8

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) **

79

80

(1.2)

IFB Average Daily Traded Val­ue (Million USD) **

37

66

(43.9)

Industry Index Information

Description

Close

% Change

Other Financial Services

2,307

6.3

Coal Mining

1,615

2.1

Machinery & Equipment

16,926

1.9

Printing & Publishing

208,768

1.1

Automotive

17,218

1.0

Base Metals

59,628

0.9

Telecommunication

1,130

0.9

IT

12,711

0.8

Utility Service Providers

232

0.6

Investment

2,066

0.5

Leather Production & Products

1,960

0.3

Insurance

4,397

0.2

Medical & Measurement Products

10,244

0.0

IT & Communications

231

0.0

Mining

12,058

0.0

Textile

1,259

(0.0)

Banking

547

(0.1)

TSE All-Share Index

97,962

(0.2)

Metallic Ore

21,172

(0.3)

Rubber & Plastics

18,878

(0.4)

Sugar

9,054

(0.6)

Chemicals

6,300

(0.6)

Foods excluding Sugar

3,295

(0.7)

Cement

578

(1.0)

Pharmaceuticals

8,096

(1.1)

Machinery & Electric Equipment

480,491

(1.2)

Metallic Products

22,116

(1.2)

Non-Metallic Ores

2,185

(1.5)

Transportation & Logistics

3,569

(1.5)

Engineering Services

676

(1.7)

Paper Products

10,868

(1.9)

Industrial Conglomerates

9,742

(2.2)

Oil Products

352,402

(2.3)

Construction

662

(3.4)

Oil Drilling & Services

363

(3.5)

Ceramics & Tiles

1,724

(3.9)

Financial Markets Management

68

(4.1)

Agriculture

5,488

(4.3)

Wooden Products

61,595

(14.1)

TSE Top 5 Gainers

Company

Close **

(USD Cents)

% Change

MESI

Mehvar Sazan Iran Khodro Co.

6.1

21.0

SPDZ

Saipa Diesel Co.

2.6

19.0

RINM

Mashad Wheel Mfg. Co.

3.6

17.8

KRIR

Irka Part Sanat Co.

3.6

9.7

MNGZ

Iran Manganese Mines Co.

11.0

8.2

TSE Top 5 Value Leaders

Company

Close **
(USD Cents)

Trade Value **

(Million USD)

SPDZ

Saipa Diesel Co.

2.6

6.3

FOLD

Esfahan Mobarakeh Steel Co.

6.6

4.9

PKOD

Pars Khodro

2.0

4.9

KAVR

Iran Khodro Diesel Co.

1.8

4.8

PNBA

Bandar Abbas Oil Refining Co. 

16.0

3.0

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

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