Tehran Stock Exchange All-Share Index Roar and Expectations
The Tehran Stock Exchange Overall Index roar to register a new high has directed a great deal of attention to the stock market. Despite the huge enthusiasm among many policymakers, shareholders and investors, there are three viewpoints on “the market sustainable growth”, “the government help through money injection” and “a holistic growth in all sectors”, proving their probable misunderstandings of how the market works.
The recent jump of the All-Share Index has launched many talks on the superiority of the stock market over other alternatives in a way that the volatile nature of the stock markets seems to be ignored. In addition to improvements in systematic factors like the descending interest rates, which is interpreted as driving companies’ valuation and consequently, the market P/E rate growth, more attempts, including the removal of the fluctuation domain and base volume, increasing floating rate as well as introducing internationally used financial instruments (specifically those used to take advantage of bearish markets) are required to increase the market efficiency bringing about sustainable prosperity in the market and not its sustainable growth.
Expecting the government injecting money (which first started in 2014) plus a holistic and simultaneous growth (originating from late 2015 when the Automotive space growth spread to the whole market) in all sectors are also against the principles on which the economics stands and the market independence, which in fact will incur huge expenses to the market. The government, however, can be helpful by raising the market regulatory body’s authority since increasing transparency and effectively implementing privatization process are in line with the market mechanism.
Last but not least, it is worth mentioning that excluding irrational behavior and speculations in some sectors, the current growth in other spaces is backed by their strong fundamentals, which has the power for the market continuous boom.
In the Market
The whole Banking space settled above its flat line with slim gains. It has been heard that the CBI officials have accepted Bank Saderat’s new financial statements and its GM seems to be held later this month, after receiving the required permission from this supervisory body.
With a few tickers active in spare part mfg. area like Zar Spring Mfg. (+4.6%) and Charkheshgar (+3.9%), the Automotive group finished in the red. Rejecting the possibility of a merger between Saipa and Iran Khodro, Saipa CEO announced the high probability of building a joint platform between them to reduce expenses.
Names in the Transportation went through positive trades. Tuka Rail faced a buy queue early in the session and kept it through the closing bell. Aria Shipping, listed on Iran Fara Bourse’s B market was positively traded for the second session in a row. On Sunday, an agreement was inked between Iran, Qatar and Turkey to facilitate trade between the said countries after Arab nations cut ties with Qatar, which also resulted in many Iranian shipping lines switching towards Qatar. This, furthermore, has ended in attempts by Iranian Chambers of Commerce to start negotiating with Qatari companies and officials for easement in transportation even more.
As one of the companies waiting for an IPO, Asia Tech, in the IT & Communication industry, was placed first as the number one fixed-line operator in using local capacities.
Releasing its H1 reports, Bandar Abbas Oil Refining has recognized IRR 629 EPS, posting a 337% rise compared to the same period last year; the company has covered 74% of its estimates for the FY ending 21 March 2018. This positive report triggered positive trades in the Oil Products space; in fact, awaiting other names’ H1 statements, the positive prospect ahead the trade dollar price growth is estimated to move their profitability upward.
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