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Iran Equity Market Weekly Summary - Trading Week Ended: August 22 – August 26 2015

Stocks listed on the Tehran Stock Exchange performed poorly for the sixth week in a row as the TSE All-Share Index experienced a 1.6% plunge to close at 64,206. The TSE's negative trend was in parallel with global equity benchmarks, which were influenced by concerns surrounding the Chinese economy. In addition to a period of slow economic activity in Iran, the rout in global commodity prices has also had an adverse effect on the Iranian stock market as more than 50% the TSE's market capitalization is linked to com­modities. However, regardless of the general trend in the market, a few sectors per­formed sharply and could potentially be considered as alternatives. Listed shares under Sugar, Leather Production, IT and Telecommunication sectors experienced positive per­formances as these indices improved by 6.3%, 5.1%, 2% and 1.5% respectively.

By looking at the market from a technical analysis perspective, the current bearish pres­sure on the TSE All-Share Index can further push the main index toward the 62,500 mark. Also, the gap between the main index and its 50 Day EMA has reached -3% which further demonstrates the possibility of future drops. This potential fall can continue toward the support level of 61,500 by considering the Double Bottom Pattern for the All-Share Index. Even though this point of view showcases a downward trend in the mid-term, it draws a promising landscape in the long-term when the main index can rise toward the challenging resistance level of 75,000.

Similar to the previous week, the index of thirty largest companies listed on the Tehran Stock Exchange by market capitalization, also declined by 1.3%. The TSE30 index closed at 2,837 on Wednesday to record a loss of 4.6% in the past four weeks.

This week the Average Daily Trade Volume of the market rose by 4% as it reached USD 38 million. Mobin Petrochemical, Isfahan Oil Refinery and Ansar Bank were the top three shares by total trade value. During the last week of August, USD 9.4 million worth of Mo­bin Petrochemical shares were traded while its share price plunged by 1% to close at USD 9 cents. Isfahan Oil Refinery's share price also declined by 1.8% to close at USD 7 cents while its weekly trade value reached USD 7 million. The third value leader of the market was Ansar Bank by recording USD 4.4 million worth of transactions. This bank's share price also slipped by 0.4% to close at at USD 7 cents.

In contrast to the stock market, the foreign exchange market witnessed an increasing trend in the value of foreign currencies. The official rate of the US Dollar increased by 0.2% to reach IRR 29,930 while its value in the free market rose by 1.2% to IRR 34,038. On the other hand, the EUR was more volatile by recording an increase of 4.2% in the free market to reach IRR 39,150 while the Central Bank of Iran increased the offi­cial rate of the EUR by 2.2% to stand at IRR 33,962. Contrary to the trend experienced by the USD and the EUR, the official rate of the GBP fell by 0.9% to reach IRR 46,390 and its rate in the free market only increased by 0.2%, being exchanged at IRR 52,600.

Furthermore, the Central Bank of Iran released its latest Consumer Price Index re­port on Wednesday. According to the CBI, the inflation rate has fallen to 15.4% for the 12 months ending on August 22, 2015, which is 0.2% lower than the figure published in the previous month. Moreover, the Year-on-Year inflation rate is reported to stand at 12.6% in August, illustrating a 1.6% drop compared to the figure released in July. In addition, the latest update of the CPI shows a 0.1% decrease of the index on a monthly basis. This is the second month in a row the Consumer Price Index has marked a negative trend as the monthly inflation figure for July was also recorded at -0.35%

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: This is a summary of Iran Weekly Report that we send to our network every week.