Iran Weekly Market Report

The Tehran Stock exchange continued its positive trend at a greater pace this week, re­cording positive returns for the seventh consecutive week. The TSE All-Share Index rose by 5.18%, closing at 77,497. Since January 2016 the TSE’s main index has grown by 25.6%, adding 15,797 points in thirty trading sessions. This week, the index started with narrow gains on Saturday and Sunday, but experienced a solid increase on Tuesday, adding 3.19% and closing at 78,199. However investors moderated share prices the next day, which reduced the All-Share Index by 0.9%, closing at 77,497. Due to the removal of sanctions, a series of international contracts between local and foreign companies have been reported in different sectors. The expectation of economic expansion to come this year and international cooperation in various industries have been reflected in the equity markets over the last few weeks. The Automotive (+17.66%) sector has been the TSE’s best performing industry, growing by 68.7% since January 2016. Metallic Products (+11.42%) and Oil Products (13.88%) have recorded the next largest gains, adding 52.9% and 43.7% in the last six weeks.

From a technical analysis perspective, the All-Share Index is already back to levels last experienced in March 2014 due to sharp increases last week. However, the index experienced a slight decline on Wednesday, reaching 77,497. Market sentiment is still bullish, which may push the TSE’s main index over 78,500 towards the index’s all-time high of 89,500. Before passing the 80,000 mark, steadier upward moves are expected. Over the last few weeks TEDPIX has been breaking resistances with considerable speed, recording a uniquely sharp uptrend. The prospect for higher targets in the short term could vanish if the index drops below the 76,500 mark and starts a stable cycle, fluctuating above 70,000. Otherwise, there is no significant resistance before 89,500.

The index of the thirty largest companies by market capitalization, the TSE30 index, recorded a 5.28% gain this week, closing at 3,282. The TSE30 index also decreased on Wednesday, dropping from 3,331, Tuesday’s closing figure. This week, Bandar Abbas Oil Refinery Co. (PNBA +18.95%) recorded the highest gain among the top 30s. In contrast, the weakest weekly performance was by Mines & Metals Development Investment Co. (MADN -3.02%).

During the last three weeks the Tehran Stock Exchange has witnessed considerable growth in traded value. The Average Daily Trade Volume (ADTV) of the market reached USD 162 million this week, 42% higher than the previous week. Saderat Bank (BSDR +9.89%) , Tejarat Bank (BTEJ +7.9%) and Mellat Bank (BMLT +5.2%) had the highest trade volumes this week, recording USD 61, USD 36 and USD 29 million worth of trades respectively.

In the foreign exchange market, the Iranian Rial improved versus the US Dollar. The Central Bank of Iran applied a minor change of 0.01% to the official rate of the US Dollar, putting it at IRR 30,179. The free market rate of USDIRR declined as well by 2.6% to 35,065. The CBI appreciated the official Euro rate by 1.86% to IRR 34,076, while the free market rate of EURIRR slipped by 0.16% to 39,764. Similarly the CBI reduced the official British Pound Sterling rate by 0.75% to IRR 43,662. The free market rate of GBPIRR reached 51,050, 1.55% higher than the previous week.

In other developments, the Statistical Centre of Iran (SCI) published its report on the country’s unemployment rate for the fourth quarter of 2015. According to the SCI, the unemployment rate has reached 10.7% – 0.2% higher than the same period last year.

Furthermore, there have been media reports regarding the expansion of Iran’s oil export destinations. According to reports, Iran has increased its crude sales by 590,000 barrels per day, exporting to France, Italy, Turkey and Taiwan. Total S.A. from France, and Eni S.p.A. and Saras S.p.A. from Italy are among the new buyers of Iranian oil. There have also been negotiations with Lukoil from Russia and CESPA Oil & Gas Company from Spain, but the potential sales volumes have not been disclosed. It is anticipated that new sales contracts will account for 1.3 million barrels of oil per day in total. As sanctions have now been lifted, the Iranian government is aiming to increase its oil exports to 2.3 million barrels per day in the near future.

In continuation of renewed international business activity in Tehran, a large Italian business delegation representing 197 companies visited Iran this week. Companies from different sectors including banking, construction, infrastructure, oil & gas and agriculture participated with the aim of becoming engaged in the Iranian market. Italian Agricultural, Food and Forestry Policies Minster, Maurizio Martina and Infrastructure and Transport Minster, Dr. GrazianoDelrio led the delegation in the three day visit to Tehran. It has been reported in the Iranian media that four major agreements have been signed in the agriculture, railway and oil & gas sectors between Iranian and Italian counterparts. Details of these agreements however, have not yet been disclosed.