Iran Weekly Iran Market Report - 26/11/2015

The Tehran Stock Exchange experienced another week of minor changes. The TSE All-Share Index slipped by 0.2%, to close at 62,734. The index started the week at 62,889 and never reached the 63,000 level, which was last recorded on Wednesday, November 18 and the index has been trading below this mark ever since. Mobile Telecommunication Co. of Iran (HMRZ), Esfahan Oil Refinery (PENS), Parsian Oil & Gas Development Co. (PASN) and also Persian Gulf Petrochemical Industries Co. (PKLJ) were the main movers of the TEDPIX for the week, despite its narrow daily fluctuations.

Slight decreases during the last two weeks have eliminated the advantage of the index to its 50 day EMA. By technical analysis perspective, the TSE All-Share Index is already standing in a supportive area. If the current support is broken, this incident can instigate the index’s fall towards the next support level at 61,500. However considering the fact that the current trade volume is considerably low, we can expect a sudden turn in the direction of the main index’s chart. Particularly, chart study patterns are still offering the possibility of having a long term uptrend toward the 75,000 level.

The index of the thirty largest companies by market capitalization, the TSE30 index, slipped by 0.5% as it closed at 2,658 on Wednesday. Experts believe the fragile commodities prices globally have affected the major companies listed on the TSE. The companies in the metal & mining industries hold 11% of the TSE30’s total market capitalization at the moment, while the share of the companies in the oil products and chemical production industries is 6% and 33% respectively. Nevertheless, Informatics Services Corporation (INFO) rose by 3.6% this week, as it closed at IRR 15,442 (approx. USD 43 cents), reminding investors of its incredible performance during recent years.

Also, the Average Daily Trade Volume (ADTV) of the market has surged to USD 42 mil¬lion, which is 78% higher than the previous week. However, it should be considered that the trade volume is inflated by large volume of block trades and also a supply of USD 46 million worth of Istisna Sukuk on Monday. In total, the highest weekly traded value belongs to Azarab Industries Co. (AZAB), Mellat Bank (BMLT) and Iran Polyacryl (PLAK) with trade volumes of USD 7.5, USD 6.0, and USD 5.9 million respectively. The share price of Azarab Industries Co. closed at IRR 3,067 (approx. USD 8.5 cents), demonstrating a weekly growth of 7.5%. Mellat Bank’s share price rose only by 0.7% as it closed at IRR 1,950 (approx. USD 5.4 cents), while Iran Polyacryl’s share price plunged by 13.9%, to close at IRR 2,371 (approx. 6.6 USD cents).

Moreover, the Central Bank of Iran announced the official rate of USDIRR at 30,028, 0.2% higher than last week. This is while the free market rate of the U.S. Dollar reached IRR 35,756 by recording a 0.45% increase. The official EURIRR rate slipped by 0.61%, reaching IRR 31,897, while the free market rate increased by 0.89% to IRR 38,626. The official rate of the British Pound has been announced at IRR 45,423 which is 0.85% lower than last week’s price. In contrast, its free market rate gained 0.27%, reaching IRR 54,700.

The Central Bank of Iran, in its latest report published this week, shows that the YoY inflation rate has fallen by 0.7% in November, compared to the previous Iranian month, reaching 10.1%. The figure shows the continuous drop in the country’s inflation rate, soon expected to reach single digits. This months reported CPI figure shows a monthly increase of 0.7% compared to the figure released in October. The report illustrates that the apparels and footwear category has recorded the highest monthly price increase, growing by 1.5%. The smallest contributors to the monthly growth of the CPI figure have been the transportation and leisure categories which have not experienced price changes compared to the previous month. The Iranian economy has witnessed a significant drop in the inflation rate as a result of the government’s disciplined economic policies. Since the election of President Hassan Rouhani in July 2013, the inflation rate has fallen by about 35%, coming down from 45% to 10.1%.

Furthermore, the Central Bank of Iran’s latest annual report on private construction activi¬ties in cities, shows that the number of projects started has dropped by 19%, standing at 157,631 in Iranian Calendar Year 1393 (March 2014 to March 2015). These new projects have a total area of 94 million square meters. The average construction costs per square meter for started projects has been reported to be IRR 7.9 million (approx. USD 221), which is 19% higher than the previous year. Most of the new projects have been started in Tehran, Esfahan and Fars provinces, as these areas have absorbed 13%, 11% and 7% of the projects respectively. Also the number of completed buildings has been report¬ed at 196,938, which is 10% lower than the previous year. In addition, the figure for average construction costs per square meter in completed projects has recorded a 20% increase reaching IRR 6.24 million (approx. USD 174). According to the report, total invest¬ment in construction projects by private investors has grown by 7.5% compared to the previous year, reaching IRR 810,563 billion (approx. USD 22.6 billion).