Iran Weekly Market Report - January 20, 2017

Tehran Stock Exchange

The Tehran Stock Exchange All-Share Index recorded its first weekly gain in six weeks, closing at 79,382, up 1.0% from last week. The majority of sectors closed in positive terri­tory. Among the major sectors, the highest weekly growth was posted by Other Financial Services (+6.9%) and Automotive (+5.2%). The improving auto industry was the main fac­tor boosting both sectors. Rayan SAIPA Leasing Co. (RASP +11.6%), which had the big­gest impact on the Other Financial Services index, yesterday revised its projected net in­come upwards for the financial year ending March 20 by 29% to IRR 1,303 billion (approx. USD 34.5 million). According to its unaudited nine-month report, the company has already earned IRR 1,009 billion (approx. USD 26.7 million) in net income. The Automotive index was lifted mainly by Iran Khodro (IKCO +15.5%) which upgraded its projected net income for the financial year ending March 20 by 56% to IRR 1,856 billion (approx. USD 49 mil­lion). Its unaudited financial statement released yesterday showed IRR 958 billion (approx. USD 25 million) net income during the three quarters. This week the weakest sector was Machinery & Electric Equipment (-2.2%) as Iran Transfo Corp. (TRNS -3.1%) continued to fall.

The Average Daily Trade Volume (ADTV) surged by 116% to USD 80 million in the third trading week of January because of a number of block trades and trading in debt securi­ties. The companies posting the highest weekly traded value were led by Azarb Industries Co. (AZAB -2.4%), Iran Khdro (IKCO +15.5%) and SAIPA Group (SIPA +0.2%) with USD 12.1 million, USD 11.4 million and USD 7.3 million respectively.

The TSE30 index of the thirty largest companies by market capitalization outperformed the rest of the market, advancing 1.4% over the week to close at 3,264. The top performer was Iran Khodro (IKCO +15.5%), while Chadormalu Mining & Industrial Co. (CHML -4.0%) dropped the most.

Iran Fara Bourse

On the Iran Fara Bourse (IFB) market, the overall index added 1.8% and closed at 845. Its ADTV reached USD 45 million, posting 9% growth, while debt securities remained the most popular instruments on the IFB with USD 145 million total traded value.

Foreign Exchange Market

On the FX market, the Central Bank of Iran barely changed the US dollar official rate, quoting it at IRR 32,366, down 0.01% from last week. The free market rate of USDIRR dropped 3.8% to 37,784, with the dollar giving up some of the 15% gains it made from September to late December 2016. The official rate of the euro was set at IRR 34,438 by the CBI, 0.3% higher than last week. The EURIRR free market rate slipped 0.8% to 42,343. The CBI slightly increased the official rate of British pound sterling, setting it at 39,731, up 0.5% for the week, while on the free market the pound dropped 1.8% to IRR 48,100.

Economic Developments

Latest industry reports demonstrate the progress made by Iran’s economy during the nine months to December 20, 2016. The auto industry reported 39% growth in output to a total of 949,497 vehicles. Passenger car production rose 41% to 881,935. Iran Khodro remains the dominant manufacturer in the sector, boosting its output by 33.5% to 451,486. SAIPA Group reported a production growth of 54% compared with the same year-ago period to 399,360 vehicles, while output at Peugeot gained 23% to 293,882 units and Renault boosted its volumes by 160% to 87,544. In the metal and mining industry, production of raw steel gained 10% to 13.8 million tonnes in the reported period while exports grew 118% to 2.5 million tonnes, earning revenues of USD 824 million. However export vol­umes have barely changed since August due to demand for raw steel in the local market. The petrochemical industry has also boosted output, with production up 7% to 37.6 million tonnes. This includes 17 million tonnes produced in Asaluyeh and 13.5 million in Mahshahr port. Almost 40% of the petrochemical products were exported in the nine-month period, earning USD 6.4 billion.

Written by Ali Karbalaee and Radman Rabii