Iran Weekly Market Report - April 29, 2016

The Tehran Stock Exchange All-Share Index witnessed a slight positive return after three weeks of recording negative performances. The TSE All-Share Index added 135 units or 0.2% by closing at 78,404. This week, the Tehran Stock Exchange witnessed lower trade volumes with narrow changes in the stock prices overall. The market leader was Automo­tive (+13.1%) which was the top performer among the major sectors. However, most of the major sectors had weak performances, recording slight gains or negative returns. The weakest major sector was Industrial Conglomerates (-4.2%), recording the deepest fall.

Under a technical analysis perspective, the TSE’s main index spent the whole week above the minor support at 78,200, without proceeding on any uptrend. The 50 day EMA is still 1% higher than the All-Share Index, displaying the index’s movement in a limited range since two weeks earlier. At the moment, there is no signal from the majority of the technical indicators regarding moving past the current short term range. The continuous trendless move of the index will reduce the current chance of an upward move toward 89,500.

The Index of the thirty largest companies by market capitalization, the TSE30 index, had a slight increase also by adding 0.3%, closing at 3,259. The top 30 stocks of the TSE started the week with slight gains, adding 1.24% to the TSE30 index by the end of the Monday trading session. But they lost 0.9% of their gains during Tuesday and Wednesday. The two Automotive companies, SAIPA Group (SIPA +24.04%) and Iran Khodro (IKCO +8.44%) recorded the highest weekly growth in the top 30s. Khouzestan Steel Co. (FKHZ -12.31%) and Metals & Mines Development Investment Company (MADN -4.52%) were the weakest performers.

This week the Average Daily Trade Volume (ADTV) declined by 14.7% to USD 81 million. It is the third consecutive week that the ADTV fell. The Shares with the highest daily trade volumes were Iran Khodro, SAIPA Group and SAIPA Investment Co. (SSAP +10.1%) by recording USD 26.8, USD 21.2 and USD 20.8 million respectively. The automotive sector had the highest weekly traded value this week, recording USD 106 million or 26% of the total market traded value.

In the FX market, the Iranian Rial was almost stable versus the US Dollar. The Central Bank of Iran quoted the official rate of US Dollar at IRR 30,310 without significant changes on a weekly basis. 0.1% was added to the free market rate of USDIRR, reaching 34,701. However, the CBI increased the official rate of Euro by setting it at IRR 34,366, 5.9% higher than the last week. In contrast, the free market rate of EURIRR slipped by 0.4% to 38,988. The official rate of British Pound Sterling was announced by the CBI at IRR 44,071, 1.1% higher than one week earlier. Similarly the free market rate of GBPIRR rose by 1.3% to 50,450.

The Central Bank of Iran released its first inflation report in the new Iranian Calendar Year, ending at March 2017. According to the CBI latest report, the Consumer Price In­dex has increased by 0.5% on a monthly basis in the first month of the Iranian Calendar Year (March/April 2016). The previous read of MoM inflation had shown a 0.7% growth rate. On a yearly basis, the growth rate of inflation has declined by 0.9% reaching 7.4%. The negative trend of inflation in Iran has taken down the YoY growth rate to the lowest measure in 6 years. Also, the latest increase in the MoM inflation rate has been the lowest growth for the first month of the Iranian Calendar Year in the previous 25 years. Reviewing the items of the Consumer Price Index reveals the benchmark cost for the Leisure group has declined by 3% on a monthly basis. The highest MoM growth has been reported in the group of Food & Beverage and also Restaurants & Hotels, both by 1.1%. The annual records are showing the only group with negative yearly changes has been Tobacco, dropping by 0.5%. Meanwhile, the highest growth rate has been in the Education segment, increasing by 21.8%.

In another development, the latest non-oil trade balance of Iran was released by Iranian Customs Administration (ICA), reporting the first month of the Iranian Calendar Year (March/April 2017). According to the ICA, Iran’s trade surplus has been USD 1 billion due to exporting USD 3 billion and importing USD 1.98 billion. The yearly comparison with the first month of the previous Iranian Calendar Year, indicates the value of the exported goods has increased by 7.91% while the weight has surged by 37.89%. The total value of the imported goods is 0.07% higher than the previous year, but the weight of them has slipped by 0.02%. By considering the weight of the exported and imported items, the income of the exported items in the first month has reached USD 367 per ton on average. The average income for the whole of last year was 19% higher at USD 453. A similar survey reflects a 13% drop in the average cost per ton of the imported items, which has reached USD 1,028 from USD 1,183. On average, the gap between the value of exported and imported goods of the country has narrowed to USD 661 from USD 730.

The Central Bank of Iran also released another report this week, covering the Tehran housing market. According to the CBI, in the first month of the Iranian Calendar Year, the number of home sales was 5,918. The average price of one square meter of residential space sold in March/April 2016 was USD 1,149. In comparison with the first month of the previous Iranian Calendar Year, the number of home sales has gone up by 20%, while the price growth has been 4.3%. However, the monthly comparison shows different re­sults with the last month of the Iranian Calendar Year. On a monthly basis, homes sales have dropped by 55%, while prices have been 5.2% lower than February/March 2016. Historically, home sales slow-down in the first month of the Iranian Calendar Year.