Iran Weekly Market Report

The Tehran Stock Exchange recorded a slight gain in the first trading week of the new Iranian Calendar Year, 1395. The TSE All-Share Index rose by 1.6%, closing at 81,480. The TSE’s main index had started the week positively, increasing to 81,200, but could not pass 81,447 due to negative performances on Monday and Tuesday. On Wednesday market sentiment turned positive once again and the All-Share Index secured its weekly gain.

During the first trading week after the Iranian New Year holidays, the Automotive sector had the highest influence on the main index and also recorded the highest trade volume. The sector had dropped 12% by the end of Tuesday’s trading session, but then rebound­ed by 4% on Wednesday. Since the removal of sanctions, the Automotive sector has been one of the market leaders due to an expectation of future cooperation with interna­tional brands and expansion in sales networks. However, the exact details of future plans and their possible effects on car producers are not yet fully sketched out. In recent weeks, this uncertainty has brought higher volatility to listed shares in the Automotive sector.

From a technical analysis perspective, the TSE All-Share Index had sluggish growth in the first trading week. However, it remains on track to reach its midterm target at 89,500. As the Iranian New Year holidays are not yet over, the drop in market trade volume is not considered to be a negative sign. However, it has led to weaker signals by some tech­nical indicators. At the moment, chart studying techniques are indicating higher growth potential for the TSE’s main index to the all-time high measure of 89,500.

The index of the thirty largest companies by market capitalization, the TSE30 Index, rose by 2.1%, closing at 3,450. Mobin Petrochemical (MOBN +11.12%) and Mellat Bank (BMLT +9.62%) were the top performers on the top 30s. The weakest performance was recorded by Iran Khodro (IKCO -8.83%), which had the highest influence on the TSE30 index.

As expected, the Average Daily Trade Volume (ADTV) of the market decreased by 86%, reaching USD 76 million. The significant decrease is due to normal seasonal variations from the last trading week of the Iranian New Year to the first trading week of the Iranian New Year. On average, the Tehran Stock Exchange witnesses higher trade volumes in the last trading weeks of the year and lower trade volumes in the first trading week of the Iranian year. This week, the shares with the highest traded values were SAIPA Invest­ment Co. (SSAP +13.1%), Iran Khodro (IKCO -8.8%) and SAIPA Group (SIPA -9.6%) with USD 37.6, USD 32.4 and USD 31.9 million worth of trades respectively.

In the FX market, the Iranian Rial depreciated against the major currencies. The Central Bank of Iran set the official US dollar rate at IRR 30,260, 0.1% higher than the previous week. However, the free market rate of USDIRR experienced higher growth reaching 34,917, recording a 1.8% increase. The official Euro rate appreciated by 0.7% with the CBI announcing the rate at IRR 34,178. The free market rate of EURIRR rose by 2.1% standing at 39,019. The GBPIRR rate had similar changes as the official rate went up by 1% to 43,508 and the free market rate was quoted at 50,033 with a 1.9% gain.

The Central Bank of Iran released its latest inflation report on Sunday, showing further declines in the annual growth rate of the Consumer Price Index. According to the CBI, in the last month of the Iranian Calendar Year (February / March 2016) CPI growth was 0.7%, on a monthly basis. The previous report had shown monthly inflation at 0.2%. The latest report shows an 8.3% increase in the Year-over-Year CPI figure, 0.6% lower than the previous read. Prices in the Communication and Tobacco sectors have experienced negative monthly changes, dropping 0.4% and 0.2% respectively. The MoM changes show the highest inflation was in the Leisure sector, which has gone up by 4.1%. YoY comparisons indicate the highest CPI growth occurred in the Education sector with an increase of 21.7%. The YoY price changes in the group of Tobacco has been negative by 0.9%.

The Iranian Customs Administration (ICA) also released its latest monthly report, cover­ing Iran’s non-oil trade for the previous Iranian year (March 21, 2015 to March 19, 2016). According to the ICA, Iran’s trade balance stood at a surplus of 916 million, 8.4% lower than the previous month’s report. Iran’s total non-oil exports have shown a 16% decline in value, reaching USD 42.4 billion. The volume of exported items has also dropped by 7%. Price per ton for exports has reached USD 453, while this figure was USD 502 one year earlier. Gas condensates have been Iran’s top non-crude export with a worth of USD 6.6 billion and constituting 17% of the total weight of exported items. A yearly comparison indicates a 52% decrease in value and a 16% drop in the volume of exported gas con­densates. This is as the price per ton of gas condensates stood at USD 418 in the last Iranian Calendar Year, while it was reported at USD 723 one year earlier. Iranian prod­ucts have been mostly exported to China (20%), Iraq (17%), UAE (14%), Afghanistan (7%) and India (7%). Compared to the previous year, China has imported 23% less from Iran, while the UAE’s imports from Iran have increased by 21%. Iran’s total imports have been USD 41.5 billion. The value of imports shows a 22% decline compared to the previ­ous year and the total volume decreased by 18%. The cost of imported items per ton has decreased to USD 1,183, from USD 1,245 in the previous year. During the year the main imported items were corn feedstock (3.39%), wheat (2.09%), soybean (1.75%), rice (1.64%) and soybean meal (1.62%). The majority of Iran’s imports are from China (25%), UAE (19%), South Korea (9%), Turkey (7%) and Switzerland (6%). The highest yearly change is recorded in the imports from the UAE, which has decreased by 36%.

The Tehran housing market report was released by the CBI this week. According to the report, the number of home sales reached 13,139 in the last month of the Iranian Calen­dar Year (Ending on March 19, 2016). The MoM comparison shows a 20% decline, while the YoY difference is -8.5%. The average price of one square meter of residential spacesold has been USD 1,206 at the year end. This is a 7.5% MoM increase and 3.9% YoY growth. It is the second consecutive month that prices have been increasing and growth rates have also accelerated in the latest reports. Last month, the MoM price increase was only 1% and YoY change had shown 3% growth. The figure for home sales in Teh­ran for the last Iranian Calendar Year was 154,681 cases, which is a 10% decline com­pared to the year before. Over the last three years, the annual sales figure of homes in Tehran has increased from 121,470 to 154,681. The average price of one square meter sold has been USD 1,115 over the year, 0.8% lower than the previous year. In the last three years, the average price of one square meter of residential space in Tehran has increased from USD 1,065 to USD 1,115.