Iran Market Reporter 06

Iran Market----------------------- Reporter

ADDRESSING THE NEEDS OF INVESTORSADDRESSING THE NEEDS OF INVESTORS

Mofid Securities Co.Member of TSE(Tehran Stock Exchange)Member of IME(Iran Mercantile Exchange)Member of Farabourse

Contact Person: Mr. Seifollahit 009821 8190 1165f 009821 8190 1022e [email protected] www.emofid.comw www.mofidkala.com

IRAN MARKET REPORTER Is produced by Mofid Securities Co.Distributed electronically via email.

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VOluME 1ISSuE 6OCTObER 20116

2www.emofid.com Iran Market Reporter No. 6 Oct 2011 ( Issue 6, Vol. 1)

Contents3 Overview

TEDPIX experienced a moderate cor-rection during October after a huge rally at the beginning of this shamsi year (April). However, higher prices of commodities and strong midyear profit reports are probably going to fuel a steady growth over the next months.

5 StockWhile TEDPIX was going to cross 27,000 once again in October, because of some political events the Index under-went a slight correction.

9 FundIn the month that Fix-Income funds had the best performance, Mofid’s funds were better than the TEDPIX.

13 CommodityValue of trades increased by 21% dur-ing October in compare with the previous month. Industrial Export Ring is becoming more active as new suppli-ers step into trading.

15 NewsLatest report of the WFE (World federa-tion of Exchanges) shows that TSE still has the best one year performance among other exchanges.

TSE Logo Gun-metal relief discovered in Lo-restan province, among the Achaemedian dynasty’s (550-330 BC) antiquities. Featuring four men, hands in hands, indicating unity and cooperation; standing inside circles of the globe, which is itself, according to Iranian ancient myths, put on the back of two cows, symbols of intelligence and prosperity.


OverviewFrom mid-October and as a result of some progress in the European debt crisis, the price of crude oil and other commodities started to rise sharply. It was initially expected that it can set the scene for the TSE to benefit, especially in some heavy-weight export oriented sec-tors.

However, a range of non-economic factors, from the odd news of an assassination plot against the Saudi officials to the threatening quotes of new sanctions on the banking and the aviation sector by the U.S., affected the optimisms for the improvements in the for-eign relations.

As the uncertainties started to rise, the investors’ risk appetite fell, resulting in low vol-ume and falling share prices. For the month of October, the TSE All Share Index (TEDPIX) fell 3 percent while the 1.4 percent decline occurred in Oct 16, the most one-day drop in four months.

There were also other issues contributing to the TSE’s October performance, specifically the inflation report and the probability of tightening policies to reverse the direction in the consumer prices.

Inflationary Pressures are Building UpIn Oct 10, a highly-awaited report from the Central Bank of Iran showed that consumer prices have picked up in the second quarter (April through September, 2011).

According to the report, the index of con-sumer prices (CPI) rose 22 percent in Sep-tember from the same month last year. The

month-over-month figure also increased by 1.8 percent, the most in at least six months, leading to 18.3 percent increase in average CPI for the year ended in September.

Some officials related this growth to the rising prices of energy and commodities but some experts believe that part of the increase came from the impact of subsidies reform with a lag of almost one year.

Monetary Response to the Rising CPIAlmost one week after the inflation report, the Credit and Monetary Council (CMC)—the responsible body for setting monetary poli-cies—decided to raise the minimum interest rate on government-backed bonds by 250 basis points to 17 percent.

Mahmoud Bahmani, the CBI Chairman and the head of the CMC, uses the issue of inflation and the real negative yield to justify the decision though he repeatedly showed his concerns over the destabilizing impact of low interest rate on the gold and foreign exchange markets as well.

It is also expected that the increase in the bond’s rate is one step before the increase in the banks’ deposit rate.

Banking SectorWith higher rates of interest in the horizon, investors still bet on increase in earnings of the banking sector. However, most of this optimism was offset by the uncertainties and the overall sell off in the market, leaving the index of the banking sector 5.1 percent lower


than September.

Metallic Ores: A Big Absent of OctoberFrom early October, the symbols of the Iron Ore companies were unexpectedly halted from trading as the negotiations on the price settings started between the stakeholders.

The negotiations are very important, as the iron ore producers, like Chadormalu [CHML1] and Gol-E-Gohar [GOLG1], sell their products to steel makers like Mobarakeh Steel [FOLD1] which is the largest Iranian steel maker with nearly 50 percent market share. So, any change in production cost will be also reflect-ed in the other companies’ balance sheets.

With the absence of the key companies, the Metallic Ores Index little changed for the month of October.

Basic MetalsAs explained earlier, the steel industry is ex-pected to be negatively affected by the result of the ongoing negotiations. Accordingly, the share price of these companies fell in October.

While the share price of Mobarakeh Steel [FOLD1] fell as much as 9.2 percent, the overall decline of the Basic Metals index was limited to 5.9 percent. It was because the declines in other companies of the sector, namely the INC Ind. [MSMI1], were less severe. The INC Ind. Is the main copper producer; the metal that its October’s price experienced the most increase in decades.

ChemicalsThe Chemicals Industry was among the least-

affected in TSE’s sectors. The index fell just 0.4 percent through October, as the 18 percent rise in crude oil price lifted optimism about the future of global demand for the chemical materials.

In addition, the appreciation of the US dollar against the Rials, which accelerated in recent months, is working in favor of this export-oriented sector.

Nevertheless, there are still some uncertain-ties about the impact of rising domestic gas and electricity prices on the cost structure of these energy-intensive companies.

As a real case, the Kharg Petrochemicals [PKHA1], the main methanol producer, re-fused to estimate these factors when it raised its full year’s EPS for the fourth time on Oct 20.

InsuranceAfter months of negotiations between the in-surance companies and the judiciary officials, both sides agreed on a 50 percent increase in the blood money.

Though it was less than the 100 percent which was initially suggested by the govern-ment, it was still high enough to negatively affect the expectations about the future rev-enue of the whole industry.

It is estimated that more than half of the vehicles lack this kind of insurance, which pay the victims’ in the case of a fatal accident; Clearly because of the relatively high premi-ums which make many owners reluctant to cover such a huge risk.

Overview


Stock | Market Summary

Trade Value (M USD) Trade Volume (M) Number of Trades Number of Trading Days

TSE1 1,918.97 6,804 345,567 23

Farabourse2 793.16 1,838 195,877 231Tehran Stock Exchange 2OTC Market

Tehran Stock Exchange

Value of Index

High Low Average Compared to last month %

Compared to last month %(in USD Term)

Compared to last year %

TEDPIX1 25,910 26,913 25,875 26,399 -3.30% -3.57% 43.86%

TEDPIX (FM) 22,047 22,956 22,027 22,492 -3.40% -3.67% 46.73%

TEDPIX (SM) 31,131 31,844 30,980 31,409 -2.43% -2.70% 41.23%

FFI2 33,406 34,679 33,136 33,955 -4.12% -4.39% 45.79%

Industry Index 19,885 20,629 19,878 20,234 -2.74% -3.02% 46.19%

TEDFIX 30 1,611 1,688 1,611 1,651 -4.06% -4.32% 51.97%1TSE Dividend & Price Index (All-share Index) 2Free Float Index

TEDPIXTEDFIX 30 is a total return index weighted by free-float market capitalization that measures the performance of 30 most traded stocks listed on Tehran Stock Exchange (TSE).


Stock | Gainers & Losers

10 Top Gainers

Company Last Price Change (%)

Mazandaran Cem. 6,036 28.32

Tabriz.Oil.Refine 2,291 17.79

Iran Const. Inv. 1,895 13.27

Omran Shahed1 2,994 13.19

Bahman Group 2,419 9.16

Post Bank 18,206 7.60

Sarmayeh Bank1 2,540 6.63

Sina Darou Lab. 14,390 6.50

Industry and Mine Inv. 1,267 5.41

Fanavaran Petr. 8,958 5.381Listed in Farabourse

10 Top Losers

Company Last Price Change (%)

Iran Transfo 4,595 (20.36)

Alborz Insurance 2,870 (16.40)

SADRA 2,189 (13.95)

Post Bank 5,950 (13.58)

Parsian Insurance 2,442 (13.00)

Khorasan Steel 6,867 (12.82)

Tehran Chemical 9,407 (11.95)

Pars Khodro 1,039 (10.28)

Iran Alloy Steel 2,839 (10.13)

Mapna 2,494 (9.90)


10 Most Active (Value)

Company Change (%) Value (M USD)

Parsian Bank (5.88) 196,292,010

Iran Mobile Tele. Co. 1.58 95,455,587

Pasargad Bank (3.92) 81,534,725

Midhco1 (3.42) 68,544,042

Pardis PC1 (0.45) 66,325,541

Tourism Bank1 1.74 58,544,099

Iran Tele. Co. 0.61 41,800,893

SADRA (13.95) 40,760,394

Mobarakeh Steel (9.09) 39,153,031

Saipa (3.33) 24,057,5481Listed in Farabourse

10 Most Active (Volume)

Company Change (%) Volume (M Share)

Parsian Bank (5.88) 643,409,058

Tourism Bank1 1.74 473,681,536

Pasargad Bank (3.92) 425,206,389

Midhco1 (3.42) 347,526,631

SADRA (13.95) 191,896,418

Mobarakeh Steel (9.09) 137,084,663

Iran Bank -R1 9.45 127,703,901

Iran Tele. Co. 0.61 126,581,597

Saipa (3.33) 116,924,181

Iran Bank1 5.25 108,609,0481Listed in Farabourse

Stock | Most Active


Highest P/E

Sector Average P/E Percent of Market Cap.

Industrial contracting 21.55 0.27%

Transportation and Storage 11.83 0.96%

Sugar & Byproducts 11.27 0.32%

Post and telecommunications 10.28 13.43%

Computer & Related Activities 9.73 1.60%

Metal Ores Mining 9.14 8.43%

Fabricated Metal Products except Machinery & Equipments 9.13 0.23%

Basic Metals 8.64 17.12%

Machinery & Equipment 7.35 0.38%

Food Products and Beverages except sugar 7.22 1.25%

Lowest P/E

Sector Average P/E Percent of Market Cap.

Medical, Precision & Optical Instruments 3.49 0.08%

Motor Vehicles And Auto Parts 4.56 5.52%

Financial leasing 4.62 0.45%

Real Estate And Construction 4.85 1.26%

Cement, Lime & plaster 4.86 2.79%

Technical & Engineering Services 5.36 2.11%

Textiles 5.65 0.21%

Chemicals & By-products 6.16 4.09%

Refined Petroleum Products & Nuclear Fuel 6.35 2.55%

Banking and other Monetary Institutions 6.46 21.95%

Stock | Average P/E


Top 10 Best Funds (Regarding return rate)

Working Days

NAV(Rial)

Asset Under Man-agement (USD)1

Last Month (%)

Last 6 Months (%)

Last 12 Months (%)

Since Inception (Compound Return)

Boursiran 836 3,033,881 14,289,972 -1.90 1.80 53.40 62.30

Ganjineh Bahman

561 2,023,990 3,976,973 -2.90 0.90 52.20 58.20

Melli Bank 1,270 4,850,961 6,462,117 -0.40 -1.70 42.50 57.40

Agah 1,181 4,338,942 8,201,671 -3.40 -4.00 41.90 57.40

Momtaz2 623 2,146,418 35,375,023 -1.70 4.00 46.20 56.40

Farabi 709 2,382,313 4,894,893 -6.00 -4.30 47.60 56.30

Novin 594 2,047,258 4,294,893 -3.10 5.90 64.50 55.30

Pishtaz2 1,271 4,315,515 10,011,792 -1.70 2.00 50.90 52.40

SahmAshena

1,288 4,092,072 1,955,989 -4.60 -6.10 40.50 49.10

Amin 716 2,088,661 1,272,238 -1.30 -2.30 47.00 45.60

TEDPIX -3.00 1.50 43.90

All Funds Index3

-0.90 3.90 32.00

1USD to Rial exchange rate: 10,770 2Managed by Mofid 3Including 60 Funds

Fund | All Funds Overview


Pishtaz Mutual Fund

Inception date May 9, 2008

Working Days 1271

Asset under managementM Rials 107,827

1 Month -1.70%

3 Month 4.40%

6 Months 2.00%

12 Months 50.90%

Life (Compound Return) 52.40%

NAV (Rial) 4,315,515

12 Months Hight 4,446,214

Low 2,842,097

Fund’s Composition Percent

Farabourse 24.39

Banking and other Monetary Institutions

16.22

Telecomunication 17.65

Metal Ores Mining 11.04

Holding 8.02

Other Industries 12.28

Fund | PishtazCommentarySystematic risk of the TSE has risen recently, so there is a temptation to move towards bonds and sukuk which have guaranteed fixed re-turn up to 17.5 percent per year.

Telecommunication sector also has been one of our largest positions in the Pishtaz fund, due to its low risk and growing market in Iran. With more than 13 percent of TSE total

market capitalization it is also one of the larg-est sectors of Iran Capital Market.

Banking sector has been beaten down recently, so it seems a prime hunting ground for us. Some specific banks in this sector are attractive and we expect an increase in their prices in the following month.


Fund | Momtaz

Momtaz Mutual Fund

Inception date Feb. 16, 2010

Working Days 623


1 Month -1.70%

3 Month 4.80%

6 Months 4.00%

12 Months 46.20%


NAV (Rial) 2,146,418

12 Months

Hight 2,230,904

Low 1,473,055


Farabourse 20.74


16.77



Holding 8.22


CommentaryAfter a huge rally at the end of last year and the earlier part of the current Shamsi year, the stock market has experienced a moderate correction which is not unexpected especially given the uncertainties in the global markets.

However, strong midyear profit reports and relatively attractive commodities prices (i.e. Oil, Urea and Petrochemical products) will probably fuel a 10 to 20 percent growth over

the next 3 to 6 months. Therefore we are cau-tiously optimistic about the performance of the TSE over the medium term.

Funds with large size, such as Momtaz, usually buy liquid shares in order to reduce their unsystematic risk. Last month most such stocks declined due to the turmoil in global markets which resulted in a 1.7 percent fall for Momtaz.


Pishro Mutual Fund

Inception date Apr. 20, 2011

Working Days 195


1 Month -2.00%

3 Month 4.60%

6 Months 6.40%

12 Months -


NAV (Rial) 1,036,658


Farabourse 26.30


16.47



Basic Metals 6.20


Fund | PishroCommentaryDue to our expectations that the US dollar would rise against Rial, we have focused on companies which sell their products in dollars and will therefore benefite from strong dollar.

We believe that over the next few months the telecommunication, petrochemical and

banking sectors will outperform the TEDPIX, therefore we are overweight in the above sec-tors.

We are also planning to invest in following IPOs in the next month in order to enhance our NAV and therfore our return.


Commodity | Summary

Iran Mercantile ExchangeAlmost 25 percent of oil and petrochemical products were traded in export ring during October. In addition Export ring of Industrial group is becoming more active as new sup-pliers enter the market. Last month 150,000

MT Grained Iron Ore (59%) were traded with the average price of 75.62 USD per Metric Ton. Export ring is the exchange trading ring for commodities with the target of international market.

Groups of Product Value (USD) Percent

Industrial Export Ring 12,477,829 1.14%

Domestic Ring 613,871,496 55.87%

Agricultural 25,581,962 2.33%

Oil & Petrochemical Export Ring 110,893,979 10.09%

Domestic Ring 335,942,920 30.57%

Mineral 0.00%

Total 1,098,768,186 100%


Commodity | Exchange Rate

Iranian Rial Exchange Rate (As of September 30)1

Code Currency in IRR Compared toLast Month (%)

USD United States Dollar 10,770 0.28%

GBP Pound Sterling 17,209 2.49%

CHF Swiss Franc 12,333 2.83%

AED United Arab Emirates Dirham 2,933 0.27%

KWD Kuwaiti Dinar 39,309 1.17%

JPY100 Japanese Yen 13,610 -2.99%

HKD Hong Kong Dollar 1,387 0.58%

OMR Omani Rial 27,974 0.28%

CAD Canadian Dollar 10,755 3.28%

TRY Turkish Lira 6,130 6.02%

QAR Qatar Riyal 2,959 0.31%

SAR Saudi Riyal 2,873 0.31%

BHD Bahrain Dinar 28,568 0.29%

CNY Chinese Yuan 1,696 1.01%

MYR Malaysian ringgit 3,503 3.82%

EUR Euro 15,075 3.00%1Official rates according to Central Bank of Iran (CBI)


NewsTehran Stock Exchange index up 46 percentOctober 26, 2011

Tehran Times: The Tehran Stock Exchange index grew by up to 46 percent in the last 12 months ending to October 21, the TSE’s gen-eral director said in Tehran on Tuesday.

Hassan Qalibaf-Asl told the Islamic Republic of Iran Broadcasting that the growth of the Tehran Stock Exchange index has been real-ized while many members of the World Fed-eration of Exchanges (WFE) as well as regional markets have faced negative outputs.

He put the value of the Iranian capital market at around 440 trillion Rials (some USD 44 billion) in the seven-month period of time, showing 24 percent growth year on year.

He said the total amount of 1.8 million

trades has been conducted in TSE during the last year, which increased to 2.7 million trades in the past 7 months of current year.

Tehran Stock Exchange reviewed TEDFIX 30 Index for the second quarter of 1390 October 25, 2011

TSE: Tehran Stock Exchange announces the following index changes as a result of the quarterly TEDFIX 30 Index review. These changes have been effective at the open on Sunday, September 25, 2011.

The TEDFIX 30 is a total return index weight-ed by free-float market capitalization that measures the performance of 30 most traded stocks listed on Tehran Stock Exchange (TSE).

In this review, Tejarat Bank, Post Bank, Calci-min Co. and Behshahr Industries Investment Group were added to and Saipa Investment Co., Rena Industrial Group Investment Co., Fars & Khuzestan Cement Co. and Civil Pension Fund Investment Co. were deleted from the index.

Index components are selected accord-ing to the market capitalization and liquidity


Newscriteria. Thus, 100 large cap companies are listed on descending basis and 30 companies meeting the following requirements:

1. It is at least 3 months since they have been listed and traded in TSE.

2. Their monthly value traded in the last 6 months ended the review date exceeds 25% of average monthly value traded of 100 large companies in this period. (for companies being listed for less than 6 months, the period will be 3/4 of the period when the share has been listed).

3. Free floats share is at least 10%.

Quarterly Index Reviews are designed to ensure that the indices continue to be an accurate reflection of the evolving equity marketplace. Free floats used in calculation of TEDFIX 30 are reviewed quarterly on the third Wednesday of the last month of every quarter. The index is calculated as a total return index (price and dividend). The base date for TEFIX 30 base is 23/8/2010 and the base level is 1000.

The following table shows the companies listed in this index in the second quarter of 1390.

Company additions to and deletions from an TEFIX 30 index do not in any way reflect an opinion on the investment merits of the company.

Index of 30 large companies - Second quarter 1390

Iran Tele. Co.

National Copper Ind.Co.

Chadormalu Mineral & Ind.

Ghadir Investment Co.

Isfahan Mobarakeh Steel Co.

Bank Mellat

Bank Parsian

Gol-E-Gohar Iron Ore Co.

MAPNA

Saipa Co.

Esfahan Oil Refining Co.

EN Bank

Iran Khodro Industrial Group Co.

Civil Pension Fund Investment Co.

Mines & Metals Development Investment Co

Khouzestan Steel Co.

Khark Petrochemical Co.

Karafarin Bank

Iran Transfo Co.

Tose-e Melli Group Investment Co.

Bahman Group Co.

Fanavaran Petrochemical Co

Saipa Investment Co.

Behran Oil Co.

North Drilling Co.

Shazand Petrochemical Co.

Fars & Khuzestan Cement Co.

National Investment Company of Iran Co.

Tosee Melli Investment Co.

Rena Industrial Group Investment Co.


NewsThe Value of IME’s Transactions Jumps by 88% October 12, 2011

IME: The value of transactions at IME’s trading floor increased by 88 pct during the 1st half of the year.

According to the report by public relations and international affairs, in this period more than 9 million tons of commodities at the value of about USD 9 billion were traded at IME’s trading floor. This data indicates that the volume of transactions is also 10 pct more than that of last year’s similar period.

The report adds that about 56 pct of the volume and 43 pct of the value of transac-tions were devoted to industrial and mineral commodities.

On the other hand, 2 million tons of oil by-products such as bitumen, vacuum bottom, base oil and etc. were traded at the value of USD 1 billion. Moreover the value of petro-chemical products trading reached to USD 1.4 billion.

However, transaction of agricultural prod-ucts saw a free fall and experienced 93 and 75 pct decrease in volume and value of trade.

According to this report, the volume of fu-tures contracts reached to 561 thousands of contracts in the mentioned period. On the other hand, the value of futures contracts also increased to USD 2.5 billion about 1500 pct greater than that of the same duration last year.

Sweeping kick off of Iron Ore in IME October 22, 2011

IME: Trading of the newly listed commodity, iron ore, made a turning point at IME’s trans-actions.

According to the report by public relations and international affairs, On Wednesday 19th

October, 150,000 tons of iron ore produced by Mishdovan and Jalalabad firms traded at IME’s trading floor. The value of the transaction reached to around USD 10 million.

The report adds that the Mishdovan iron


Newsore was traded for 67 USD per ton and Jalala-bad iron ore was traded for 75 USD per ton.

Iron Ore is among the commodities that listed recently in IME and it suggests that it will devote a great part of transactions at IME to itself.

Iran Market Reporter 06

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