Regarding capital market of Iran which saw a transformational change in its return—approximately28%– which continued about two months after implementation of JCPOA, the overall economy is, still, in transition process. This means that we will witness signs of improvement in the economy of Iran at least in the second half of Iranian fiscal year, according to economic experts. Thus, the profitability of listed companies could be positively impacted on the back of reopening in business deals with foreign firms in due time. In this vein, increase in oil prices and commodities touching presently historical floor prices, mingled with dollar index predicted to climb down in the second half of 2016–provided that inflation rate reach its targeted rate of 2% by the Federal Open Market Committee (FOMC) chaired by Janet Yellen—are the catalysts looked forward to bolstering financial gains in the capital market of Iran
Meanwhile, the entrance of the benchmark index into correction phase was not unprecedented as the growth in the market was accelerated on the hills of historic nuclear deal without ample fundamental base to support such immediate rise in the All-Share Index.
That said, the market is expecting some real driving positive news to take off. There is some anecdotal evidence that the interest rate for banking system might come down to 16%, a measure considered crucial and vital for the deepening and development of the stock market. This combined with the holding of AGMs in the next coming month for Iranian companies might lead to relative activity in the market.
All in, the market performance is recorded to be better than its prior month in the Persian month “Khordad” (21 May-20 June) and the chances are that it might exit the downward correction path in this time period.
Elsewhere, as commodities’ prices are ending their down cycle in the world markets, it is believed that the minerals and the relevant industries could experience spike in their prices. With respect to rising oil price trajectory, this will influence petrochemical and oil products segments in the capital market and, in turn, would intrigue activity in trading among market practitioners since these are among sectors taking up most weight of the market capitalization in Tehran Stock Market and act as leaders for the rest of the sectors.
Furthermore, high financing costs are another big issue with the firms in the market in the light of expensive rate of loans offered by the banking system. With the reduction of interest rates in the foreseeable future to near inflation rate, we can forecast improvement in the net profit margins of related listed companies and higher Price-Earnings ratios in the passage of time.
In the Market
In today’s activity, TSE index notched up more than 312 points to 76,292. Names such as “Shebandar” rand “Shepna”, and “Kechad” with 72, 60 and 33 positive impact on the Overall Index, respectively, were the major leader in the group, “Khodro”, was among down components of Tehran Stock Exchange, pulling down the benchmark index by 34 points. “Vasapa”, gained the title of highest value of trades, with circa USD $ 3.5 mn worth of transactions.
Elsewhere, IFX, Iran Fara Bourse benchmark index, rose more than 3 points to 804. “Zob”, “Shavan” and “Sheraz” exerted the most positive effect on the. Zob stood at the top of list for the most transacted symbol with trades worth of around $11.3 mn.
Automotive: All in all most names in the space witnessed a negative session. The giant of the space, Khodro lost in gains and finished its activity in the negative territory, slumping 2% and seeing volume of 26mn shares changing hands, halting at 3479 IRR per share. “Khezamia” and Khavar were next names in the group seeing their prices paring gains. The luckiest ticker was “Khemehvar”, which was halted for its AGM, with a triumphant reopening as the name saw 20% rise in its price, finishing its victorious day at 2851 IRR per share. Next in line is “Varena” going up 2% and closing at 2428 IRR.
Metals: Most names closed their action in the positive domain. Zob led the group, with having more than 125mn of its shares being transacted. It went up 3% continuing its up trending, with registering 16% return for its shareholders. Also, today this name was block traded in the retail market and 20mn of its shares with base price of 3160 IRR per share was traded in the ZOBZ2. Foulaj was another symbol ended its session in buy queue in spite of the realities of the industry. This is mostly due to speculative trading by day traders according the managing director of Iran Alloy Steel Co.
Chemicals: They went through a positive session except for “Shesina”. “Shetooka” was the leader in this category and saw +5% rise in its price, closing at 5,110 IRR per share
Oil products: Excluding “Shespa”, other names were traded in the positive domain. “Shepna” topped the category with experiencing 5% spike in the price, ending its action with thin buy queue.
Iron Ores: the overall atmosphere in this sector was positive. “Kegol” and “Kenoor” went up in the prices, “Kenoor”experiencing slim buy queue at the end of its trading day. There was news on an agreement between Islamic Republic of Iran Railway Co. and Gol-e-Gohar Industrial and Mining Co. to construct a new rail way. This is deemed to enhance “Vama’aden” trading in the market as it is a major shareholder of mining names in the group.
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