Iran Weekly Iran Market Report - 04.02.2016

The Tehran Stock Exchange experienced increasing share prices for the sixth consecu­tive week. The TSE All-Share Index continued its recent uptrend, closing at 73,684, 3.76% higher than the week before. The TSE’s main index had closed at 73,725 on Tuesday, but a negative performance on Wednesday undid 0.11% of the weekly gain. This week the TEDPIX experienced slower growth, with a particularly weak performance on Sunday (-0.39%). The Banks sector (-2.33%) had a significant negative effect on the main index. The Automotive (+3.7%) sector’s weekly growth rate fell as well. Over the last few weeks the Banks and Automotive sectors have been recording the highest trade volume measures of any sectors. The Automotive sector’s index rose only by 3.7% this week, while its average weekly return in the prior four weeks had been 11.8%. Oil Prod­ucts, Metallic Ore and Base Metals recorded the highest weekly gains with 14.4%, 11% and 10.5% respectively.

From a technical analysis perspective, the TSE All-Share Index is already higher than its 50 day EMA by around 12%, though its pace of growth declined before surpassing minor resistance at 71,500. The majority of technical analysis indicators continue to indicate an upward trend for the moment. The main resistance level stands at 76,500, though minor challenges are expected before reaching 75,000. During the last three weeks the trade volume in the market has risen significantly (by c.130%), supporting the index positive trend.

The index of the thirty largest companies by market capitalization, the TSE30 index, also continued to rise, increasing by 2.69% to close at 3,117. It is the first time in five weeks that the TSE30 index has recorded a lower gain than the TSE All-Share Index. This week, Chadormalu Mining Industrial Co. (CHML +16.6%) recorded the highest gain among the top 30s, while Bank Melli Investment Co. (BANK -6.7%) had the weakest per­formance. The list of shares on the TSE30 index has also been updated; Jam Petro­chemical (PJMZ +7.8%) Mobin Petrochemical (MOBN +3.2%) and Shazand Petrochemical Company (PARK –1.0%) have entered the top 30s, while SAIPA Group (SIPA +8.2%), Tamin Petroleum & Petrochemical Investment Co. (PTAP +3.5%) and Behran Oil Refining Co. (NBEH +7.8%) have been dropped from the index.

The Average Daily Trade Volume (ADTV) of the market reached USD 114 million, almost 22% lower than the previous week. SAIPA Group, MAPNA Group (MAPN +9.68%) and Pars Khodro (PKOD -4.12%) recorded the highest traded values this week, recording USD 34.8 million, USD 27.7 million and USD 23.4 million worth of trades respectively.

The FX Market witnessed a stronger free market rate by the US Dollar, reaching 36,016, 0.42% higher than the previous week. However, the Central Bank of Iran changed the official US Dollar rate by -0.01% to IRR 30,181. The CBI increased the official Euro rate by 1.76% to IRR 33,453, while the free market rate of EURIRR dropped 0.34% to IRR 39,827. Similarly the official rate of the British Pound Sterling was increased by the CBI to 43,991, 2.31% higher than last week. However, the free market rate of GBPIRR de­creased by 2.86% to IRR 50,270.

Iran’s president, Hassan Rouhani, finished his first official trip to Europe this week by signing contracts worth billions of dollars. Mr. Rouhani met the Italian prime minister and the French president during his European tour. In Italy, 14 deals were signed with a total worth of USD 18.4 billion, including memorandum of understandings with Saipem over two projects. One deal, worth USD 3.7 billion, will see Saipem participate in the renova­tion and development of the Pars Shiraz and Tabirz oil refineries. It is also reported that Saipem will cooperate with Iran’s government to construct a 1800km gas pipeline. The Iranian media has estimated the worth of this deal to be around USD 4-5 billion. In anoth­er development, Iran has ordered 118 commercial passenger airplanes from Airbus dur­ing President Rouhani’s visit to France with an estimated cost of USD 25 billion. Bouy­gues Industrial Group and Aeroports, the French airport authority, will also cooperate with Iran to construct the second terminal of Tehran’s Imam Khomeini International Airport (IKIA). In October 2015, Bloomberg quoted IKIA officials stating their target to host 20 million passengers per year, by implementing a development plan. Hassan Rouhani’s trip to France was also followed by the signing of a framework agreement with Total to deliv­er 150,000-200,000 bpd of Iranian crude oil to European refineries. A deal with Peugeot Citroen was also signed to create a joint venture with Iran Khodro, the Middle East’s larg­est auto maker. Agence France-Presse (AFP) reported that it would be a 50/50 partner­ship to produce 200,000 Peugeot cars per year from 2017. The estimated investment for this project is USD 430 million.