Iran Weekly Market Report - May 19, 2017

Tehran Stock Exchange

The Tehran Stock Exchange All-Share Index remained stable in the last trading week be­fore Iran’s presidential election on May 19.  The TSE All-Share Index closed at 80,344 for a gain of 0.3% over the week. Oil products (+3.0%) was the top performing sector with Bandar Abbas Oil Refining Co. (PNBA +5.8%) the main driver, while Paper Products (-7.5%) was the weakest among major sectors, weighed down by further falls in Kaveh Pa­per Industries Co. (KSKA -7.6%) and Iran Carton Co. (KRTI -7.4%).

The TSE30 index of the thirty largest companies by market capitalization rose 0.2% to close at 3,130. Bandar Abbas Oil Refining Co. (PNBA +5.8%) led gainers while Pardis Petrochemical Co. (PRDZ -4.8%) was the biggest faller in the top 30s.

The Average Daily Trade Volume (ADTV) fell to USD 57 million from USD 91 million last week. Most traded stocks over the week were led by SAIPA Group (SIPA +2.3%), Silica Sand Mfg. Co. (TAMI -8.9%) and Iranian Investment Petrochemical Group (IPTR -7.5%) with volume of USD 16.2 million, USD 5.7 million and USD 4.3 million respectively.

Iran Fara Bourse

The Iran Fara Bourse overall index closed at 915, losing 0.9% over the week. Its ADTV fell to USD 31 from USD 39 million. Debt securities volumes were down 13% but remained the most traded on the IFB with total value of USD 82 million.

Foreign Exchange Market

On the currency market, spreads widened between official and free market rates. The offi­cial rate of the US dollar was set by the Central Bank of Iran at IRR 32,442 for a drop of 0.03% over the week but on the free market the dollar gained 0.3% to IRR 37,628. The CBI raised the official euro rate by 2.6% to IRR 36,197 but the euro strengthened further on the free market, gaining 3% to IRR 42,295. The British pound’s official rate gained 0.1% to IRR 42,058 and added 1.1% on the free market to IRR 49,000.

Economic Developments

Home sales in Tehran totaled 5,348 in the first month of the Iranian calendar year ending April 20, down 8.5% from the same month a year ago. According to the Central Bank of Iran, the average price for one square meter of residential space in the reported month reached IRR 43.7 million (approx. USD 1,160), up 3.6% from a year earlier but 4.3% down on the previous month. The last month of the Iranian calendar year is considered the high season in the real estate market, while market activity drops to the lowest level in the first month of the year.

In a separate development, the Money & Credit Council eased mortgage loan conditions for individuals and married couples. According to the new instructions, the amount of a mortgage that can be obtained without having a one-year deposit in the government owned Bank Maskan (Housing Bank) has risen by nearly 20%. However applicants would have to buy the mortgage loan rights on the Iran Fara Bourse. Under the new conditions, individual applicants will be able to receive a mortgage up to IRR 800 million (approx. USD 21,260), while married couples in Tehran can obtain up to IRR 1.2 billion (approx. USD 31,890). The new measures could significantly improve purchasing power in the housing market as 57% of houses sold in Tehran have been priced between IRR 1.0 bil­lion to IRR 2.5 billion (approx. USD 26,580 to USD 66,440). However some analysts say monthly mortgage payments are still too expensive for many would-be borrowers. Latest estimates show that the average household monthly income in cities is about IRR 26 mil­lion (approx. USD 690). But with mortgage payments running at IRR 12 million to IRR 21 million (approx. USD 320 to USD 560) a month, it is evident why the housing market sup­port plan has not been successful so far.