Iran Weekly Market Report - April 28, 2017

Tehran Stock Exchange

The Tehran Stock Exchange All-Share Index continued its positive trend this week, clos­ing at 79,596 for a gain of 1.2%. Paper Products (+14.3%) led risers among sectors over the week, boosted by a surge in Kaveh Paper Industries Co. (KSKA +14.9%), followed by Sugar (+10.5%) which saw broad gains across the sector. The weakest major sectors of the week were Metallic Products (-3.4%) which was weighed down by falls in Machine Sazi Arak Mfg. Co. (MARK -4.7%) and Azarb Industries Co. (AZAB -1.8%), while the Me­tallic Ore (-2.0%) sector was dragged down by lower prices for iron ore.

The TSE30 index of the thirty largest companies by market capitalization edged up 0.1% to close at 3,096. Esfahan Oil Refining Co. (PNES +7.4%) recorded the highest weekly gain. Golgohar Mining & Industrial Co. (GOLG -4.1%) dropped the most.  Blue chip stocks have been relatively steady in contrast with companies with smaller market capitalizations which have been more volatile in recent weeks.

This week the Average Daily Trade Volume (ADTV) fell 14% to USD 74 million. Trading in stocks regarded as more speculative also affected trading turnover. Some analysts sug­gest uncertainty surrounding the May 19 presidential election has made market players focus on very short term prospects. Most traded stocks were led by SAIPA Group (SIPA +1.1%), Asan Pardakht Persian Co. (APPE +3.6%) and Khorasan Sugar Co. (GSBE +18.4%) with USD 11.6 million, USD 7.6  million and USD 4.7 million in trades respective­ly.

Iran Fara Bourse

The overall index of the Iran Fara Bourse closed up 1.6% for the week at 922. Market ADTV rose 33% to USD 72 million. Equities remained the most popular securities on the IFB with a total traded value of USD 201 million. The majority of trades were carried out on the Base Market accounting for USD 133 million, which has the lightest regulatory framework and often includes companies with the lowest market capitalization. Since the beginning of the new Iranian calendar year, the total traded value on the Base Market has surged by 175% following the availability of direct online trading in this market.

Foreign Exchange Market

On the currency market the official rate of the US dollar was left unchanged by the Central Bank of Iran at IRR 32,439. On the free market the US dollar rose 0.2% to IRR 37,546. The CBI increased the official rate of the euro by 1.8% to IRR 35,403 while it gained 2.1% on the free market to IRR 40,502. The official rate of the British pound gained 0.7% to IRR 41,755 and on the free market it rose 1.1% to IRR 48,000.

Economic Developments

Inflation is increasing but at a slower rate according to the latest data released by the Cen­tral Bank of Iran. The consumer price index for the first month of the Iranian calendar year ending April 20, 2017 gained 1.1%, following a 2% increase a month earlier. On a yearly basis inflation has steadily risen to 12.6% in April from a recent low of 9.1% in November. The highest monthly price rises for April were posted by Leisure and Cultural Affairs (+3.3%) and Foods & Beverages (+2.9%). At the other end of the scale Education re­mained unchanged. On a yearly basis the highest increases were seen in Foods & Bever­ages which rose 19.9% and Health Care which gained 16.9%. Communication was the category with the lowest inflation of 6.8% over 12 months. Following the trend of the previ­ous month the main drivers of inflation in Foods & Beverage were higher prices for eggs (+9.4%), fresh fruits (+7.6%) and fresh vegetables (+6.0%).

Separately the Statistical Centre of Iran updated employment figures showing that over 615,000 jobs were added in the Iranian calendar year ending March 20, 2017. Total em­ployment rose 2.5% to 22.5 million over the year. Under Hassan Rouhani’s presidency an average of 490,000 jobs have been added annually, which is 49% higher than the yearly average recorded over the previous 13 years.