Iran Weekly Market Report

The Tehran Stock Exchange witnessed a slight change for the third consecutive week as the TSE All-Share Index closed at 77,697, 0.2% lower than last week. The main index of the Tehran Stock Exchange started the week with negative returns, losing 0.9% by Monday. It then recovered partially, adding 0.2% on Tuesday and Wednesday. The major sectors have had mixed performances but the key driver for the market’s flat performance has been the lower gains of the market leaders. This week the Automotive, Oil Products and Metallic Products sectors recorded increases of 4.6%, 4.0% and 7.0% respectively. These sectors’ average weekly gains in February 2016 have been 8.7%, 8.0% and 7.5% respectively. The IT sector’s average weekly gains have been 7.2% in February, but the sector dropped by 2% this week. The Chemical and Banking sectors, which are the larg­est sectors by market capitalization, have posted lower growth rates in the current week as well. The Chemical sector added only 0.5%, while the Banking sector decreased by 2.9%. The two sectors had gained 1.4% and 1.2% on average during February 2016. In contrast with these sectors, the Construction sector recorded significant improvements, adding 4.1% this week. The sector had been gaining 1.4% on average per week. Rubber & Plastics’ negative performance in February has turned to a 1.2% gain in the trading week ending March 2, 2016.

From a technical analysis perspective, the All-Share Index has been in range for three weeks, after a spike from 61,500 to 78,000. In this period, the gap between the market benchmark and its 50 day EMA has fallen to below 5%. Three weeks earlier the All-Share Index was 16% higher than its 50 day EMA. During the most recent three weeks, the in­dex could not go higher than 78,200, and at the same time, it has also not gone below 76,600. By going beyond the 78,500 resistance level, the index will likely pick up again to reach and potentially surpass its all time high of 89,500. However with two weeks remaining to the Iranian New Year holidays, the index may not have enough time to muster its uptrend.

The TSE30 index, the index of the thirty largest companies by market capitalization, continued its minor weekly changes for the third week. The TSE30 index slipped by 0.7%, closing at 3,265, while it had added 0.5% one week earlier. Bandar Abbas Oil Refining Co. (PNBA 10.6%) rose the most among the top 30s, while Parsian Bank (BPAR -7.5%) had the weakest performance.

The Average Daily Trade volume (ADTV) of the market declined by 31% this week, reaching USD 125 million. It is the lowest measure in the last three weeks. The top three shares with the highest weekly traded value were Fajr Petrochemical (BFJR +7.26%), Iran Khodro (IKCO +5.5%) and Bandar Abbas Oil Refining Co. (PNBA +10.6%). They recorded a USD 80, USD 49 and USD 35 million traded value respectively.

The FX Market witnessed slight changes on the USD dollar versus the Iranian Rial. The Central Bank of Iran left the official rate of USDIRR unchanged at 30,201. However, the free market rate slipped by 0.4% to 34,564. The official Euro rate was set at IRR 32,802 by the CBI, 1.5% lower than the previous week. Similarly, the free market rate of EURIRR declined by 1.6% to 38,087. The official rate of British Pound Sterling was the only currency to appreciate against the Iranian Rail. The CBI added 1% to the GBPIRR rate, stat­ing it at 42,508. However the free market GBPIRR rate dropped by 1.8% to 48,800.

The Iranian Customs Administration (ICA) has recently released its latest report on the country’s non-oil trade, covering the first eleven months of the Iranian Calendar Year (March 21, 2015 to February 19, 2016). Per the ICA report, the country’s total imports were USD 37.7 billion for the period, a 23.3% decline year-on-year. Non-oil exports experienced a lower relative decline of 16.7%, totaling USD 38.7 billion. There was a USD 1 billion surplus on the trade balance account, a 44% reduction year-on-year. Iran’s surplus on non-oil trade has fallen over 50% during the last two months. In keeping with the previous report, Iran’s principal exports remain petrochemicals, and leading export destina­tions were China, Iraq, UAE and Afghanistan. Imported goods were, primarily, Wheat (2.1%), Soybean (1.85%), Rice (1.68%) and Automobile Spare parts (1.63%). According to the report, the principal exporters to Iran were: China, UAE, South Korea, Turkey and Switzerland.