EghtesadOnline: Selling continued on Saturday for stocks, with the Tehran Stock Exchange main gauge, TEDPIX, logging a third straight drop after getting hit by another jump in the rial value and investor speculation going awry.
Although the market started off in a positive mood and rose 4,300 points in the first hour of trading, in an unexpected turn of events, the market turned bearish for the rest of the day. Earnings uncertainty sent TEDPIX down 1474.08 points or 0.79 on the first trading day of the week to mark a three-day losing streak after a series of record highs since the summer had brought in an inflow of fresh liquidity to the market in recent weeks.
Volatility in the foreign exchange market which has seen the rial lose nearly 75% of its value in the past six months, has been the main force behind the bull market. But as speculative behavior and the desire for quick gains became the norm in the market, things started to go south.
While at first only export-oriented stocks were in big demand that soon spread to every share that was up for grabs. With rial beginning to pare losses in the middle of last week, more investors began to panic, according to Financial Tribune.
A series of positive news from policymakers' decision in the forex market which allows for market -friendly forces and government starting to lift price caps in the Iran Mercantile Exchange are said to be reasons that the market has avoided heavier corrections.
Although the currency market is beset by a lack of information about exchange rates since a crackdown on exchange rate websites began, reports suggest that the currency rates are enjoying relative stability and are on a downward trajectory. The US dollar is being traded around 132,000 rials and the euro at 160,500 rials. Some reports suggest that the US dollar was even being traded below the support level of 120,000 rials on Saturday.
Expectations of the parliament to approve the bill that joins Iran to the International Convention for the Suppression of the Financing of Terrorism this week and the subsequent improvement in Iran's standing with the Financial Action Task Force and CBI's renewed focus on the open market are the main boosts to investor sentiment.
Reuters reported on Saturday that the Trump administration is actively considering waivers on sanctions it will reimpose next month for countries that are reducing their imports of Iranian oil. It said that the US government is “in the midst of an internal process” of considering exceptions called SRE waivers, or significant reduction exemptions.
In an analysis on the CBI-affiliate news website IBENA, Majid Einian, a market expert wrote that since a massive liquidity surge in the past years followed by the steep slide in rial's value will make runaway inflation a fact of life in the coming months, the recent meteoric rise of stocks is only natural and not a bubble waiting to pop.
"In an economy where the yield of risk-free treasury bills is over 35%, property prices have doubled and the rial keeps losing its value, counting the stocks growth as bubble is a mistake but that is as long as it reflects the inflation," Einian wrote.
> Stocks at the Week's Outset
Tehran Stock Exchange’s main index lost 1,474.08 points or 0.79% on Saturday to end trading at 184,085.2.
About 6.1 billion shares valued at $139.77 million changed hands at TSE for the day.
Trading at TSE and Iran Fara Bourse starts on Saturday and ends on Wednesday.
Ma Insurance was the biggest winner as its shares went up 14.72% to 2,362 rials per share.
Aabsal Co. incurred the biggest loss among all TSE-listed companies and went down 9.59% to 4,109 rials per share.
Mobarakeh Steel Company was the biggest laggard behind the benchmark's fall, followed by Iran National Copper Industry Company, and Pars Petrochemical Co.
Omid Investment Group gave the biggest boost to the benchmark index, followed by Isfahan Oil Refining Co., and Mines and Metals Development Investment Company.
The Price Index lost 430.73 points to close at 53,802.2.
The First Market Index was down 955.24 points to post 137,383.8.
The Second Market Index declined by 3,562.71 points to reach 358,141.3.
The Industry Index went down by 1,490.08 points to register 166,443.9.
The Free Float Index was down 1,902.08 points to hit 197,268.23.
The TSE 30 went down 67.37 point to settle at 8,938.4.8 and the TSE 50 ended 52.65 points lower to finish at 7,937.6.
> IFX Down 0.26%
Iran Fara Bourse’s main index IFX lost 5.44 points or 0.26% to close Saturday trade at 2,109.4.
About 1.67 billion securities valued at $74.78 million were traded at the over-the-counter exchange for the day.
Bank Day had the highest number of traded shares as 103.58 million of its shares were traded.
Iran Cultural Heritage and Tourism Investment Group Company registered highest trade value as $2.67 million worth of its shares changed hands.
Iran & Shargh Leasing Company, Rail Seir Kowsar Co, and Sobhan Oncology Co. registered the highest value increase.
Alborz Bulk Co., Damavand Power Generation Company, and Sina Port and Maritime Company suffered the biggest decline.
Damavand Power Generation Company, Marun Petrochemical Company, and Hormozgan Steel Company had the most negative impact on IFX.