EghtesadOnline: Tehran Stock Exchange set a fresh record high on Monday as investors received more positive news on corporate earnings, especially export-oriented stocks that have benefited the most since the rial's decline intensified six months ago.
The market's all-share index leapt 2.15% to reach 168,624.5. According to a majority of analysts, the coming days are fateful for the equity market as investors will decide whether the rally will be sustainable in the face of coming political and economic challenges.
Monday's bull market was mainly attributed to investor's satisfactory response to corporate monthly earnings reports gradually being released. Investors will particularly look for export figures of petrochemical and mineral firms in that they account for the bulk of the non-oil exports and are big contributors to the market rally.
According to the analytics website, Donyaye Bourse, shareholders are also looking out for signs from possible fallout from new US sanctions on the earnings of companies. The stock market's return on investment during this summer was 47.5%, bringing the total ROU since the beginning of the financial year in March to more than 66% – a figure which is likely to increase given the continued rally, Finncial Tribune reported.
Last month, Washington reimposed sanctions on Iran’s purchase of US dollars and its trade in gold, precious metals, coal and industrial software. The move came after US President Donald Trump announced in May that he is pulling out of the multilateral nuclear deal Iran signed with world powers in 2015.
Washington is also pressing other countries to zero out their imports of Iranian oil by Nov. 4, when sanctions related to Iran’s energy sector kick back. Iranian oil exports have plunged by 35% since April, according to Bloomberg data.
Investors are also keeping an eye on President Hassan Rouhani's visit to New York to attend the UN General Assembly meeting.
The visit came a day after terrorists attacked a military parade in the southern city of Ahvaz, killing 25 people. Tehran has blamed Washington and some of its European and regional allies for the bloodbath.
Another slight relief for investors has come from the trade war between the US and China, which is expected to worsen as the world' two largest economies turn sour toward each other.
This is while the trade war spreads as the Trump administration hits around $200 billion of Chinese imports with tariffs of 10%. The Chinese are striking back with tariffs on around $60b of American exports, including nuts and furniture. The only silver lining for investors seems to be the fact that tariffs were not raised to 25% by the US.
Another factor fueling the stock market rally is said to be the wave of new liquidity from small investors who are regarding the stocks as a rival to other parallel markets such as gold and currency.
Analysts believe that the Exchange and Security Organization, as the market regulator, should seize on the opportunity to allow more initial public offerings in order to keep the momentum going. According to the Donya-e-Eqtesad newspaper, however, there seems to be no plan in sight for any IPOs to "deepen the market."
Another trouble area is the scarcity of public float since 85% of the stocks are held by major shareholders. Public float or free float represents the portion of shares of a corporation that are in the hands of public investors as opposed to locked-in stock held by promoters, company officers, controlling-interest investors, or government. This figure for developed economies, according to Donya-e-Eqtesad, is hardly 10%.
Overall Market Data
Tehran Stock Exchange’s main index gained 3,552.43 points or 2.15% on Monday to end trading at 168,624.5.
About 3.89 billion shares valued at $81.88 million changed hands at TSE for the day.
Trading at TSE and Iran Fara Bourse starts on Saturday and ends on Wednesday.
Hormozgan Cement Co. was the biggest winner as its shares went up 29% to 8,239 rials per share.
Damavand Minig Company incurred the biggest loss among all TSE-listed companies and went down 5% to 38,467 rials per share.
Esfahan Steel Co. gave the biggest boost to the benchmark index, followed by Mines and Metals Development Investment Company, and Iran National Copper Industry Company.
Fajr Petrochemical Co. was the biggest laggard behind the benchmark's fall, followed by Bandar Abbas Oil Refining, and Parsian Oil and Gas Development Group.
The Price Index gained 1,038.30 points to close at 49,283.5.
The First Market Index was up 2,696.01 points to post 124,317.
The Second Market Index added 6,697.77 points to reach 335,403.8.
The Industry Index increased by 3,384.58 points to register 153,809.6.
The Free Float Index was up 3,910.48 points to hit 179,820.66.
The TSE 30 went up 195.33 point to settle at 8,063.1 and the TSE 50 ended 159.21 points higher to finish at 7,227.1.
> IFX Up 2.51%
Iran Fara Bourse’s main index IFX gained 47.67 points or 2.51% to close Monday trade at 1,949.69.
About 877.01 million securities valued at $51.35 million were traded at the over-the-counter exchange for the day.
Iran Cultural Heritage and Tourism Investment Group Company had the highest number of traded shares and trade value as 74.94 million of its shares worth $2.76 million changed hands.
Middle East Mines Industries Development Holding Company, Rishmac Productive and Exports Company, and Parsian Railway Transport Development Co. registered the highest value increase.
Shomal-e Gharb Housing Investment Co., Iran & Shargh Leasing Company, and Mihan Insurance suffered the biggest decline.
Middle East Mines Industries Development Holding Company, Esfahan Steel Co., and Hormozgan Steel Company had the most positive impact on IFX.