Annual review: Tehran Stock Exchange grew despite global recession
Baku, Azerbaijan, March 20
By Farhad Daneshvar - Trend:
As most of stock markets in the world have been in downtrend, the Tehran Stock Exchange (TSE) indicated 28 percent growth during the last Iranian fiscal year (starting 21 March 2015).
The traders in the Tehran Stock Exchange celebrated the new Iranian calendar year on March 20, while the TSE saw strong performances in its shares in the last week of the calendar year, 1394. The TSE main index rose by 2.4% closing at 80,219 points in its last week in 1394.
Given the fact that Iran's economy is heavily dependent on oil incomes and in a condition that the global market has experienced a sharp decline in oil prices, the dramatic surge in the TSE seems surprising to many.
Alireza Kadivar, a financial analyst, considers the implementation of the Joint Comprehensive Plan of Action (JCPOA/nuclear deal) and its psychological impacts on the market's traders as the most important reasons for the upward trend in the TSE.
The TSE main index jumped 25 percent in January when international sanctions against the Islamic republic were lifted as a result of the implementation of the nuclear deal.
Kadivar also describes a decision by Iranian bankers to cut the interest rates on banking deposits as the second reason behind the surge in the TSE.
Back in February, Iranian bankers agreed to cut the annual interest rate by two percent, dropping from 20 to 18 percent. The bankers also decided to decrease the daily interest rate to below 10 percent.
Following the political and economic developments, the automotive, IT and transportation & logistics sectors experienced the highest growth over the last Iranian year.
However, the rubber & plastics, ceramic & tiles and cement sectors demonstrated a weak performance in the mentioned period.
The surge in automotive sector came following the recent deals clinched between Iranian and international carmakers.
One of the first post-sanctions contracts to be signed between an Iranian and a foreign company was a contract between major Iranian car manufacturer Iran-Khodro and the French Peugeot. The deal envisions the production of three models of Peugeot in Iran through 50-50 venture.
Mercedes-Benz, a multinational division of the German manufacturer Daimler AG, as well as France's Renault are also among those international carmakers eyeing Iran business.
With the removal of sanctions, in addition to the leading car makers, enormous foreign delegations planning to reap fat profits from Iran's untapped market have visited Tehran signing a number of agreements.
In the new Iranian year, the President Hassan Rouhani's administration will put efforts into luring billions of foreign investment for renewing the country's aging industry which could be considered as a strong sign indicating that the TSE will continue to surge in the current year.
Farhad Daneshvar is Trend Agency's staff journalist, follow him on Twitter: @Farhad_Danesh