Iran Weekly Market Report

The Tehran Stock Exchange had another flat week with low trade volume as the main index slipped by 0.2%, closing at 62,409. Overall, the TSE All-Share Index has recorded a 1% decline during the last four weeks. The index declined by 0.3% during Sunday and Monday’s trading sessions, reaching 62,374 which is the lowest measure since mid-October. However, the minor recovery on Tuesday and Wednesday added 0.06% to the index’s value, to close at 62,409.

According to technical analysis perspective, the main index of Tehran Stock Exchange has not experienced considerable changes compared to the previous week, due to the recent slight moves of the TEDPIX. This can also be seen in the TSE All-Share Index’s limited fluctuations, as the volatility index has reached new lows on the second week of December. The TEDPIX’s current support level stands at 61,500, while the index needs to surpass the 63,000 level to be in the right track towards the next resistance level at 65,000.
Also, the index of the thirty largest companies by market capitalization, the TSE30 index, had a weak performance as it closed at 2,622, losing 0.5% compared to the previous week. The TSE30 index has lost 3.45% of its value in the last four weeks, fluctuating around its lowest level in two years. Due to the substantial share of commodity based companies in the TSE30 index, lower global commodity prices and a weak future pro­spect have put the index under pressure.

Moreover, the Average Daily Trade Volume (ADTV) of the market dropped by 27% this week, reaching USD 22 million. Some analysts believe that the low levels of activity in the market is due to investors’ anticipation of news regarding the removal of sanctions, ex­pected to take place in the coming weeks. Meanwhile, the highest traded values were recorded by Mellat Bank (BMLT), Parsian Bank (BPAR) and Saderat Bank (BSDR), as their weekly trade volumes were reported at USD 4.1, USD 3.5 and USD 3.1 million re­spectively. Mellat Bank’s share price closed at IRR 1,900 (approx. USD 5.25 cents), 2% lower than the previous week, while Parsian Bank’s share price slipped by 1% as it closed at IRR 1,118 (approx. 3.1 cents). Saderat Bank's share price added 0.4% as its close price stood at IRR 860 (approx. USD 2.3 cents).

Furthermore, the FX market witnessed higher fluctuations by the Iranian Rial versus ma­jor foreign currencies. The Central Bank of Iran set the official rate of the U.S. Dollar at IRR 30,105 , with no change compared to last week, while the free market rate of USDIRR rose by 1%, reaching 36,216. Also, the free market rate of the Euro surged to its highest level in 50 days at IRR 39,556, recording a weekly growth of 2.1%. The CBI in­creased the official rate of EURIRR by 3.1%, quoted at 32,833. On the other hand, the British Pound Sterling had a different experience as CBI announced the official rate of GBPIRR at 45,196, 0.5% lower than the previous week. The free market rate of the Brit­ish Pound slipped by 0.3%, reaching IRR 54,950.

Moreover, Iran’s Money & Credit Council held a meeting on Tuesday at the Central Bank of Iran, and many had expected a reduction in interest rates to be announced by the council as a result. However, these expectations were not met as this topic was not cov­ered at this meeting. Due to a major drop in the inflation rate in the past two years, there is currently a spread of around 10% between the inflation rate (standing at 10.1%) and interest rates on annual bank deposits (standing at 20%). Members of the Money & Cred­it Council have voiced their support for interest rates on bank deposits to be reduced as a result. Nevertheless, the banking industry seems reluctant to reduce the rates as some unregulated credit institutions can offer higher rates to depositors and gain market share from the banks. Still, the Money & Credit Council has in its latest meeting demanded the Central Bank of Iran to prepare a full report on interest rates for the next meeting so that a decision can be made in this regards.