Iran Weekly Market Report - October 03, 2016

The All-Share Index recorded its first positive performance in four weeks as stock prices saw broad improvements. The Tehran Stock Exchange All-Share Index added 1.1% to close at 77,300, recovering part of its 2.2% fall over the previous four weeks. The Sugar sector (+13.3%) saw the highest weekly growth. The sector has surged 41% in the last six weeks, reversing falls since March 20th, the beginning of the current Iranian Calendar Year. The Sugar sector has risen 35% since the start of the Iranian year and has recorded the highest growth among all major sectors. The All-Share Index, however, recorded a 3.6% decline in the same period. Machinery & Equipment (+8.0%) was the second top gainer of the week among the major sectors. In contrast with the Sugar sector, which has seen broad increases, Machinery & Equipment was mostly impacted by Absal Co. (ASAL +26.79%), Iran Tractor Manufacturing Co. (TRIR +7.96%) and Pars Tousheh Investment Co. (TSHE +7.91%). At the bottom of the performance table sat ‘Other Financials’ (-3.0%) and Insurance (-2.7%) sectors, which have recorded the steepest weekly decreases. Ra­yan SAIPA Leasing Co. (RSAP -6.07%) and Leasing Iranian Co. (LIRZ -0.42%) drove the negative weekly return on the ‘Other Financials’ index. The Insurance sector was nega­tively affected by Alborz Insurance Co. (BALB -3.05%).

Reviewing the market from a technical analysis perspective, the TSE All-Share Index final­ly passed over the 76,500 mark. The index still needs to overcome the resistance level at 77,500 but it is already ahead of its 50 day EMA by 0.3% for the first time in September. Also, the Money Flow Index has also shown some signs of recovery, standing above the 60 level.

The TSE30 index, the index of the thirty largest companies by market capitalization, in­creased by 1.1% to close at 3,123. The narrow positive returns on the index were mostly driven by Persian Gulf Petrochemical Industries Co. (PKLJ +5.01%) and Esfahan Mo­barakeh Steel Co. (FOLD +4.99%). In contrast, Mobin Petrochemical Co. (MOBN -2.71%) had the most negative impact on the TSE30 index.

This week, the Average Daily Trade Volume (ADTV) of the market declined by 13% to USD 58 million. However, this was on the back of lower trade in participation bonds and fewer block trades. Those trades aside, trade in equities improved significantly. SAIPA Group (SIPA +9.28%) saw the highest weekly value of trade, recording USD 19.6 million, 402% more than the last week. The second highest weekly traded value was recorded by Azarab Industries Co. (AZAB +3.13%), reaching USD 13.6 million, 97% growth in a week.

On the Iran Fara Bourse (IFB) market, the overall index saw a slight change. The IFB overall index closed at 817, 0.1% higher than a week earlier. The IFB’s ADTV dropped by 40% to USD 34 million, following lower volume of equity trades. Debt securities were the most popular instrument on the IFB and recorded almost USD 88 million worth of trades.

In the FX market, the official rate of the US Dollar continued its rise at 0.2% and was quot­ed at IRR 31,460 by the Central Bank of Iran. The free market rate of the USDIRR in­creased by 0.3% to 35,757. The Euro’s official rate stood at IRR 35,339 as the CBI in­creased it by 0.5%. The free market rate slipped by 0.8% to IRR 39,588. The CBI set the official rate of British Pound Sterling at 40,967, 0.03% lower than last week, while the free market rate of GBPIRR remained unchanged at 46,900.

The Central Bank of Iran released its latest inflation report, covering the Consumer Price Index in the sixth month of the Iranian Calendar Year, ended September 21, 2016. The CBI report shows the inflation growth rate has slowed; the MoM growth rate is 0.7%, down from 1.1% in the previous month. The monthly growth in the CPI index has returned to levels targeted by the Money & Credit Council (less than 1% in a month). Food & Bever­age, the only group recorded lower prices, saw its index drop by 0.2%. The highest in­crease was recorded by the ‘Leisure’ category which rose 3.3%. The year-on-year inflation rate has increased by 0.1% to 9.5%. On a yearly basis, the smallest change was recorded by the ‘Communications’ group which added 0.1%. The education sector saw the greatest change, recording 21.7% growth.

The Islamic Republic of Iran’s Customs Administration (IRCA) released its initial six-month report on the non-oil trade balance. Iran’s non-oil exports in this period have increased by almost 6% since last year to USD 21.7 billion, while imports have dropped by 2.6% to USD 20.3 billion. A previous report in August 2016 showed a USD 2.3 billion surplus, but this has already declined by 39% to USD 1.4 billion. During the reported period, the main export was petrochemical products at USD 8.7 billion, 22% higher than last year. This growth came on the back of higher export volumes. The five-month report showed a 50% growth in the volume of exported petrochemical products (16 million tons), while the price per ton dropped by 20% to USD 461. Details of volume and prices are not mentioned in the latest IRCA report. The main imports into Iran are soy feedstock, soy bean, rice, auto­mobile spare parts and vehicles with a value of USD 551, USD 503, USD 478 and USD 432 million respectively. In the first half of the Iranian Calendar Year, China has been Iran’s main trading partner, exporting USD 4.8 billion and importing almost USD 4 billion worth of goods. Iran’s exports to China have seen 1.9% yearly growth, while imports from China have decreased by 7.8% annually. Iran’s second largest trading partner is the UAE, which has imported USD 3.40 billion worth of Iranian products, a 18.6% slump over the past year. The UAE’s exports to Iran have fallen by 17.3% since last year, reaching USD 3.45 billion. Iran’s third and fourth largest trade partners are Turkey and South Korea, which exported USD 1.3 and USD 1.57 billion each, and imported USD 2.3 and USD 1.7 billion worth of products from Iran respectively. Germany has become one of the major exporters to the Iranian market, selling USD 1.2 billion worth of goods, 26% higher than
last year.

The Central Bank of Iran also released its monthly report on the Tehran housing market for the first sixth months of the Iranian Calendar Year, from August 22 to September 21. According to the CBI report, home sales in Tehran stood at 14,287 units, 16% lower than the previous month but 10.9% higher than the comparable period last year. The average price of one square meter of residential space has increased by 2.3% on a yearly basis, to USD 1,193. However, the price has slipped by 0.6% on a monthly comparison. The previ­ous month’s report had offered positive signals from the housing market, however, the latest monthly statistics show the housing market is already cooling. There are no public reports on the country’s housing market so the Tehran report is considered to be the benchmark for the sector across the country. During the first half of the Iranian Calendar Year, ended September 21, total home sales in Tehran reached 83,199, 14.7% higher than the same period last year. However, it is 8% lower than the total sales figures from two years earlier. The average price for one square meter of residential space in this peri­od was USD 1,169, a 3.7% yearly increase. In comparison with two years earlier the price has risen 3.5%. 

written by Ali Karbalaee and Radman Rabii