TSE under Market Players’ Scrutiny
As one of the most important markets in each country, investigating the stock market future trend is vital for economic practitioners. With the All-Share Index shedding 3.75% during 2016/17, different viewpoints have been collected on the performance of the Tehran Stock Exchange in the new Persian calendar year, including a survey conducted by Donya-e Eqtesad paper, which involves opinions of a 172-member population, 125 minority shareholders and 47 experts. While both groups unanimously agree over a higher performance in the second half of the year, more than 80% of experts explicitly stated that the market will adopt an ascending trend since its beginning.
The direction towards which the stock market will be headed depends on many factors. The positive outlook by experts over the market trend mostly arises from optimism about several macro-economic factors like inflation and economic growth rates. It was so while minority shareholders relied mainly on the past trends of the market to conclude its future behavior; they had predicted an ascending trend in the same period last year hugely based on the 30% growth of the All-Share index in the last quarter of 2015/16, which unfortunately did not materialize as expected.
Parallel markets’ movements also play a major card in investors’ game. Despite the lowering of interest rate on deposits, the money market is still the major opponent of the stock market; nearly half participants in both groups agreed on this point. The interesting point was the unanimity of both groups on replacing the housing market (as the second opponent in surveys in the previous year) with the foreign exchange and gold markets as having potential to compete with the stock market; paying interest to the foreign exchange market can in fact affect the whole economy in general and the stock market in particular in different ways.
Being determining factors in the recent years, sanctions, the JCPOA implementation and the parties-involved commitment to its content are still regarded as influencing the macroeconomic climate of the country by both groups. Other points included the role of international markets and global commodity prices along with the upcoming presidential election being held in the next month in the country.
Concerning the return on the market, all participants estimated return ratio ranging from 10-20% in this year while other previous surveys showed that a 30% return had been expected for 2017/18.
Being asked on the highly-profitable sectors in the current year, both experts and minority shareholders selected the Iron Ore and Metals spaces among their top choices, which mainly originates from optimism over the continuance of commodity price growth in global markets. Oil Products, Pharmaceuticals along with the Computer industries were their other options. Furthermore, the Automotive sector was named as the first-challenging space, followed by the Banking group. The Automotive sector is surrounded by ambiguities and therefore, irrational behaviors by shareholders specifically started since the JCPOA was hit. Names in the Banking space are also to go through huge restructuring and reforms, which led to many of them being halted for long periods; this seems to convince investors to stay away from this sector until dust is settled.
All in all, irrespective of the existing concerns and uncertainty, both groups estimated positive movements in the new year, although their expectations have been adjusted based on their experience along with the sentiment and movements of the market in the recent years.
In the Market
Despite not-strong start, tickers in the Automotive space faced demand growth, led by Saipa, with some mostly in the spare part mfg. area facing buy queues. Saipa CEO announced the finalization of the contract between this company and Citroen and the payment of the first installment for their joint venture with Saipa Kashan; it was this news which dragged up Saipa from the red zone.
It has been heard that Electric Khodro Sharq (+3.34%) claims from automakers, worth IRR 1100 bn, is to be settled soon. The trading of 70% of Khavar Spring Mfg. Company’s (+0.29%) share was finalized the other day with Iran Khodro (-0.11%) officially exiting the management structure of this company; Pars Spring Mfg. Company is now in charge. Besides, 9 mn shares of Iran Khodro were block traded in the retail market at IRR 2,700.
With the oil prices increasing up to $54 in global markets, all names in the Oil Products industry witnessed positive trades, led by Tehran Oil Refining (+3.11%), with Lavan Oil Refining facing buy queues.
Symbols in the Chemicals industry also followed the same trend with Sina Chemical Industries, Nirouchlor and Saina Hygienic Industries closing with buy queues; the latter has been heard that is planning to raise its capital by 170% in order to apply financial restructuring.
All companies listed on the Metal Products group, except from Jam Darou (-0.41%), ended above their flat lines; after a long period of negative trades, Arak Machinery Mfg. closed in the green 1.99% higher. Azarab Industries along with Ama Industrial closed with buy queues.
DISCLAIMER: This report has been prepared and issued by Agah Brokerage Firm on the basis of publicly available information, internally developed data and other sources believed to be reliable. The information contained herein is not guaranteed, does not purport to be comprehensive and is strictly for information purposes only. Agah does not assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions. Any expressions of opinions are subject to change without notice.
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