EghtesadOnline: It was a historic day for shares in Iran's equity market on Monday. The primary cause of the excitement is simple yet groundbreaking: The foreign currency exchange market is officially liberalized.
For over four months, the government insisted on a policy of fixing the rial to enforced rates against the US dollar, mandating large exporters to sell their forex earnings at predetermined prices and outlawing any trade at bureaux de change.
Now steel and petrochemical exporters, which constitute about half of Tehran Stock Exchange and Iran Fara Bourse, are free to sell their earnings on the secondary foreign exchange market at negotiated rates, the Central Bank of Iran's Governor Abdolnasser Hemmati announced.
The measure will kick in from Tuesday, but the good news typically has stocks jumping a day before, according to Financial Tribune.
TSE's main index TEDPIX surged 5,198.18 points or 4.05% to end trading at 133,646.2. This is an all-time high for the index and, on top of that, its highest single-day growth ever.
Iran Fara Bourse’s main index, IFX, gained 53.37 points or 3.62% to close at 1,527.28. IFB, too, has pushed its historical high but lacks a few points to also break its daily growth record.
Trade at TSE broke a record to reach 3.66 billion shares valued at $342 million, growing 28.4% and 55% in the number of shares traded and trade value respectively compared to the day before.
TSE market capitalization is naturally at its highest ever and hit 4.9 quadrillion rials ($111.5 billion) on Monday.
IFB trade dropped 23.5% and 14% in the number of traded shares and trade value to 794 million shares valued at $116.5 million.
Trading at TSE and Iran Fara Bourse starts on Saturday and ends on Wednesday.
CBI Unveils Forex Plan
As promised, CBI Governor Abdolnasser Hemmati appeared on national TV on Monday and unveiled the new forex plan.
"Based on the government's new foreign exchange plan, only essential goods listed by industries, agriculture and health ministries will be traded on the first market at the 42,000-rial rate. The price of these goods will not change even a rial by the end of the [fiscal] year (March 20, 2019)."
The official emphasized that the new plan's primary focus is to "expand the [foreign exchange] market" and make it "more transparent".
Hemmati also pointed to the financial markets, especially equities' role to control and sway the secondary forex market by channeling investments to long-term financing.
"I've talked to the head of Securities and Exchange Organization and capital market experts on this and [we believe] it is crucial to control the secondary [forex] market using the open financial markets. We have already started and will announce positive news in the next two weeks," he said.
Currencies and gold coin prices also reacted to Hemmati's remarks by retreating on Monday. Each USD was traded below 90,000 rials for the day, and the benchmark Bahar Azadi gold coin dropped 850,000 rials to 32.7 million, according to Tehran Gold and Jewelry Union data.
Sanctions Return, EU Blocking Statute Follows
Meanwhile, the first batch of reimposed US sanctions on Iran came into effect on Monday. However, investors were nonchalant, as they kept pouring money into both petrochemical and metal exporting firms.
It still remains to be seen if Iranian companies can somehow circumvent the sanctions as export-oriented firms have yet to announce any strategy to face them.
In response, the European Union announced that it has updated its Blocking Statute in support of Iran nuclear deal.
Described as part of EU's support for the implementation of the 2015 Iran nuclear deal, the updated Blocking Statute will allow EU operators to recover damages arising from US extraterritorial sanctions and nullify the effects in the EU of any foreign court rulings, according to European Commission's press release.
The EU said the statute will enter into force on Tuesday. Yet its actual effectiveness on a sanctioned Iran remains to be seen.
Daily Trade in Detail
Khorasan Steel Company was the biggest riser at TSE on Monday, going up 36.32% to 7,765 rials per share. Toos Gostar Investment Company, on the other hand, incurred the biggest loss among all TSE-listed companies and went down 19.28% to 1,055 rials per share.
Persian Gulf Petrochemical Industrial Company gave the biggest boost to TEDPIX, followed by Khorasan Steel Company and Mobarakeh Steel Company.
Yet Asan Pardakht Persian was the biggest laggard behind the benchmark's fall, followed by Tejarat Bank and Telecommunications Company of Iran.
The Price Index gained 1,524.2 points to close at 39,185.7.
The First Market Index surged 4,107.2 points to post 97,354.1.
The Second Market Index jumped 9,029.48 points to reach 271,443.5.
The Industry Index gathered 4,854.16 points to register 122,725.2.
The Free Float Index won 4,902.71 points to hit 141,880.63.
The TSE 30 was up 309.98 point to settle at 6,706 and the TSE 50 ended 267.92 points higher to finish at 5,857.1.
As for IFB, Esfahan Steel Company had the highest number of traded shares and trade value, as 211.24 million of its shares valued at $7.9 million changed hands.
Ghadir Petrochemical Company, Tabarok Company and Marun Petrochemical Company registered the highest value increase. On the other hand, Day Insurance, Alvand Housing Investment and Afranet Company suffered the biggest decline.
Marun Petrochemical Company, Zagros Petrochemical Company and Esfahan Steel Company had the most positive impact on IFX.