EghtesadOnline: The Iranian equity market's meteoric rise last week enabled it to break records, yet it lost steam by the trading week's end on Wednesday and bled part of its gains.
Overall, Tehran Stock Exchange's all-share index, TEDPIX, gained 7,570 points or 6.1% during the week that ended on August 8 to close at 131,521.6.
Iran Fara Bourse’s benchmark index, IFX, grew by 71.1 points or 5% to stand at 1,499.6, according to Financial Tribune.
For both exchanges, solid gains first came on Sunday, as they extended their winning streak following positive news of an expanding secondary forex exchange market. In contrast to the slowdown on Saturday, TEDPIX and IFX grew 3.3% and 3.8% respectively for the day.
Yet what really sent stocks flying was the Central Bank of Iran's official approval on Monday to get the secondary market dealing at "negotiated prices" the next day. Investors reacted favorably to make Monday one of Iran stock market's historical days.
TEDPIX grew 4% in one day to register both its highest-ever daily growth, as it also hit a new historic high. IFX, for its part, jumped 3.6% to reach a new all-time high.
Trade at TSE also broke a historical record on Monday to reach 3.66 billion shares worth $342 million, bringing its market capitalization to a high of 4.9 quadrillion rials ($111.5 billion).
Tuesday trade, in contrast, was rather tepid after new developments in the secondary market. It is safe to say that investors' expectations have been met and the market had grown as much as it could on the back of the news. It would have taken another jolt of positive developments to push share prices any further and there seemed to be none on the horizon.
With that in mind, traders wasted no time on Wednesday to reap their profits and the wave of sales ensued. Indices dropped for the first time after days of ceaseless growth, with TEDPIX going down 1.54% and IFX losing 2.12%.
However, that does not mean that risks didn't have a role to play in the downturn. According to Financial Tribune's sister publication Donya-e-Eqtesad, investors were spooked by the ambiguities in petrochemical feedstock pricing and enforced rates for metals at Iran Mercantile Exchange.
The interesting fact is that the risks above are nothing new and were introduced during and before the market rally. IME steel prices were enforced about two weeks ago and petrochemical feedstock prices had raised questions ever since the rial's devaluation against USD quickened. So, in effect, the risks were not fresh and gained weight simply because positive news had died down.
This shows the psychological factor in Iran's equity market. When there's a bull market, the slightest hint of good news is highlighted and seen as a reason to start buying.
But right when there's a slight lull, negative news prompt selling. In other words, when investors have had up to 2% of average returns every day for the past eight days, reasons to turn shares into cash are always within reach.
> Weekly Trade in Detail
Over 12.9 billion shares valued at $1.1 billion were traded on TSE last week. The number of traded shares and trade value rose by 37% and 64% respectively compared to the previous week.
Trading at Iran’s stock markets starts on Saturday and ends on Wednesday.
TSE’s First Market Index gained 5,407 points or 6% to end at 95,770.1.
The Second Market Index jumped by 15,889 points or 6.32% to close at 267,301.7.
At IFB, over 4.03 billion securities valued at $594.2 million were traded, with the number of traded shares and trade value growing by 25% and 68% respectively compared to the previous week.
IFB’s market cap also gained $888 million or 2% to reach $41 billion.
Its First Market witnessed the trading of 706 million securities valued at $42.2 million, down 14% in number of shares traded and up 1% in trade value compared to the previous week.
And trade at the Second Market was up 49% and 52% in the number of securities traded and their value respectively, reaching 2.3 billion valued at $173 million.
Over 15 million debt securities valued at $297.3 million were also traded at IFB, growing 109% and 108% respectively week-on-week.
Exchange-traded funds trade were also up 54% and 72% in volume and value reaching 87 million worth $33.3 million.
Housing mortgage rights’ trade also reached 480,000 securities worth $7.5 million, up 8% and 9% respectively.