Share prices on the Tehran Stock Exchange experienced growth for the third consecutive week in a row as the TSE All-Share Index rose by 1.4%, closing at 63,516. After nine weeks, the TSE’s main index once again went above the 63,000 level, to reach its high­est value in the last four months. The market benchmark’s recent gains have mostly been supported by sectors, such as Machinery & Electric Equipment (24%), Automotive (22%), Metallic Products (22%) and Other Financial Services (21%). Some experts believe with the upcoming implementation of the nuclear agreement between Iran and the EU3+3, known as the Joint Comprehensive Plan of Action, the market’s recent rally will intensify in the coming days. However, the downtrend in global commodity markets has also ad­versely affected the Iranian oil, petrochemical, and metal and mining industries.

By technical analysis perspective, the TEDPIX has already surpassed its resistance level of 63,000, drawing a promising outlook towards higher gains, targeting the 70,000 level. However, we believe the index may face challenges at the 65,000 level. The TSE All-Share Index has already gone above its 50 day EMA by 2%, which is happening for the first time since late July 2015. A negative scenario for the market gauge is implausible at the moment but the index needs to show more progress in the coming days, to reduce the risk of falling below the 63,000 level once again.

Also, the index of the thirty largest companies by market capitalization, the TSE30 index, recorded 2.2% growth, to close at 2,685. The TSE30 index has already added 4.5% dur­ing he last three weeks, standing at its highest measure since Nov 21, 2015. This week, the two of auto manufacturing companies which are listed among the top 30 firms, were the major positive movers of the TSE30 index. The share prices of SAIPA (SIPA +23.5%) and Iran Khodro (IKCO +9.7%) surged to IRR 1,164 (approx. USD 3.1 cents) and IRR 1,866 (approx. USD 5.09 cents) respectively.

Moreover, the Average Daily Trade Volume (ADTV) of the market reached USD 64 mil­lion this week. The previous week’s ADTV was reported at USD 99 million which was affected by the USD 377 million block trade of Bandar Abbas Oil Refining Co.’s (PNBA -2.8%) shares. Otherwise, the ADTV would have been reported at USD 44 million last Thursday. This week’s top three stocks with the highest traded values were Mellat Bank (BMLT +6.3%), Azarab Industries Co. (AZAB +0.38) and Iran Transfo Rey Co. (TRNS +7.4%) and), which recorded USD 11.7, USD 9.6 and USD 7.3 million worth of trades.

Meanwhile, the FX market witnessed fluctuations by various foreign currencies against the Iranian Rial. The Central Bank of Iran (CBI) announced the official rate of the US Dol­lar at IRR 30,179, 0.1% higher than the previous week. Although, the free market rate of USDIRR slipped by 0.3%, reaching 36,591. The official EURIRR rate increased by 0.7%, reaching IRR 32,845, while the free market rate of Euro had a minor gain of 0.1%, to stand at IRR 40,182. Furthermore, both the official and free market rates of the British Pound Sterling, declined against the Iranian Rial. The official rate of GBPIRR stood at 43,466, which is 1.5% less than last week. Whereas the free market rate ended up at 52,850, losing 2.7%.

Furthermore, various signals are suggesting that the sanctions which have been imposed on Iran may be lifted over the course of this weekend. According to the top Iranian nucle­ar negotiator and Deputy Foreign Minister, Abbas Araghchi, the International Atomic En­ergy Agency (IAEA) is expected to release its report on Friday, verifying Iran’s fulfillment of its obligations according to the Joint Comprehensive Plan of Action (JCPOA). The IAEA’s verification will put the agreement’s “implementation day” into effect, which means sanctions related to the Iranian nuclear program, imposed by the US, EU and UN would be lifted. Also, there are discussions on whether the Iranian Foreign Minister, JavadZarif and the EU’s High Representative on Foreign Affairs and Security Policy, Federica Mog­herini will officially issue a joint statement from Vienna, closing the Iranian nuclear dossier after more than 12 years.

Experts believe the recent positive moves in the Tehran Stock Exchange are related to investors’ expectations regarding the removal of the sanctions. At the moment, as some of Iran’s main industries are facing challenges due to low international commodity prices, the country is nonetheless expecting major international investment in its oil, petrochemi­cal, metal and mining sectors. Also, due to Iran’s large, young, and well educated popula­tion of c.80 million, international investors have also shown a great deal of interest in tap­ping into Iran’s lucrative consumer market. This fact is inspiring possible joint ventures between local companies and international majors. Iranian media has already reported on Renault-Nissan’s interest to buy the Iranian auto manufacturer, Pars Khodro Co. Fur­thermore, there has been many reports about Iran Khodro and Peugeot Citroen’s plans to once again re-establish their broad cooperation and also potentially turning Iran into a regional export hub by exporting 30% of their future products.

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