Iran Market

ADDRESSING THE NEEDS OF INVESTORS

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

----------------------- Reporter

VOluME 1 ISSuE 6 OCTObER 2011

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Contents
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Overview
TEDPIX experienced a moderate correction 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 9 13 15

Stock
While TEDPIX was going to cross 27,000 once again in October, because of some political events the Index underwent a slight correction.

Fund
In the month that Fix-Income funds had the best performance, Mofids funds were better than the TEDPIX.

Commodity
Value of trades increased by 21% during October in compare with the previous month. Industrial Export Ring is becoming more active as new suppliers step into trading.

TSE Logo Gun-metal relief discovered in Lorestan province, among the Achaemedian dynastys (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.

News
Latest report of the WFE (World federation of Exchanges) shows that TSE still has the best one year performance among other exchanges.
Iran Market Reporter No. 6 Oct 2011 ( Issue 6, Vol. 1)

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Overview
From 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 sectors. 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 foreign relations. As the uncertainties started to rise, the investors risk appetite fell, resulting in low volume 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 TSEs October performance, specifically the inflation report and the probability of tightening policies to reverse the direction in the consumer prices. 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 CPI

Almost one week after the inflation report, the Credit and Monetary Council (CMC)the responsible body for setting monetary policiesdecided 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 bonds rate is one step before the increase in the banks deposit rate.

Inflationary Pressures are Building Up

In 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 consumer prices (CPI) rose 22 percent in September from the same month last year. The
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Banking Sector
With 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
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Iran Market Reporter No. 6 Oct 2011 ( Issue 6, Vol. 1)

Overview
than September.

Metallic Ores: A Big Absent of October

From 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 reflected in the other companies balance sheets. With the absence of the key companies, the Metallic Ores Index little changed for the month of October.

affected in TSEs 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 uncertainties 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, refused to estimate these factors when it raised its full years EPS for the fourth time on Oct 20.

Basic Metals
As explained earlier, the steel industry is expected 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 Octobers price experienced the most increase in decades.

Insurance
After months of negotiations between the insurance 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 government, it was still high enough to negatively affect the expectations about the future revenue 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 premiums which make many owners reluctant to cover such a huge risk.
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Chemicals
The Chemicals Industry was among the leastwww.emofid.com

Iran Market Reporter No. 6 Oct 2011 ( Issue 6, Vol. 1)

Stock | Market Summary

Trade Value (M USD) TSE1 Farabourse2 1 Tehran Stock Exchange
2

Trade Volume (M)

6,804 1,838

Number of Trades
345,567 195,877

Number of Trading Days

23 23

1,918.97 793.16

OTC Market

Tehran Stock Exchange

Value of Index High Low Average Compared to Compared to Compared to last month % last month % last year % (in USD Term)
-3.30% -3.40% -2.43% -4.12% -2.74% -4.06% -3.57% -3.67% -2.70% -4.39% -3.02% -4.32% 43.86% 46.73% 41.23% 45.79% 46.19% 51.97%

25,910 26,913 25,875 26,399 TEDPIX1 22,047 22,956 22,027 22,492 TEDPIX (FM) 31,131 31,844 30,980 31,409 TEDPIX (SM) 2 33,406 34,679 33,136 33,955 FFI 19,885 20,629 19,878 20,234 Industry Index 1,611 1,688 1,611 1,651 TEDFIX 30 1 2 TSE Dividend & Price Index (All-share Index) Free Float Index

TEDFIX 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).

TEDPIX

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Iran Market Reporter No. 6 Oct 2011 ( Issue 6, Vol. 1)

Stock | Gainers & Losers

10 Top Gainers
Company Mazandaran Cem. Tabriz.Oil.Refine Iran Const. Inv. Omran Shahed1 Bahman Group Post Bank Sarmayeh Bank1 Sina Darou Lab. Industry and Mine Inv. Fanavaran Petr. 1 Listed in Farabourse Last Price
6,036 2,291 1,895 2,994 2,419 18,206 2,540 14,390 1,267 8,958

Change (%)
28.32 17.79 13.27 13.19 9.16 7.60 6.63 6.50 5.41 5.38

10 Top Losers
Company Iran Transfo Alborz Insurance SADRA Post Bank Parsian Insurance Khorasan Steel Tehran Chemical Pars Khodro Iran Alloy Steel Mapna Last Price
4,595 2,870 2,189 5,950 2,442 6,867 9,407 1,039 2,839 2,494

Change (%)
(20.36) (16.40) (13.95) (13.58) (13.00) (12.82) (11.95) (10.28) (10.13) (9.90)

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Iran Market Reporter No. 6 Oct 2011 ( Issue 6, Vol. 1)

Stock | Most Active

10 Most Active (Value)
Company Parsian Bank Iran Mobile Tele. Co. Pasargad Bank Midhco1 Pardis PC1 Tourism Bank1 Iran Tele. Co. SADRA Mobarakeh Steel Saipa 1 Listed in Farabourse Change (%)
(5.88) 1.58 (3.92) (3.42) (0.45) 1.74 0.61 (13.95) (9.09) (3.33)

Value (M USD)
196,292,010 95,455,587 81,534,725 68,544,042 66,325,541 58,544,099 41,800,893 40,760,394 39,153,031 24,057,548

10 Most Active (Volume)

Company Parsian Bank Tourism Bank1 Pasargad Bank Midhco1 SADRA Mobarakeh Steel Iran Bank -R1 Iran Tele. Co. Saipa Iran Bank1 1 Listed in Farabourse Change (%)
(5.88) 1.74 (3.92) (3.42) (13.95) (9.09) 9.45 0.61 (3.33) 5.25

Volume (M Share)
643,409,058 473,681,536 425,206,389 347,526,631 191,896,418 137,084,663 127,703,901 126,581,597 116,924,181 108,609,048

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Iran Market Reporter No. 6 Oct 2011 ( Issue 6, Vol. 1)

Stock | Average P/E

Highest P/E
Sector Industrial contracting Transportation and Storage Sugar & Byproducts Post and telecommunications Computer & Related Activities Metal Ores Mining Fabricated Metal Products except Machinery & Equipments Basic Metals Machinery & Equipment Food Products and Beverages except sugar Average P/E
21.55 11.83 11.27 10.28 9.73 9.14 9.13 8.64 7.35 7.22

Percent of Market Cap.

0.27% 0.96% 0.32% 13.43% 1.60% 8.43% 0.23% 17.12% 0.38% 1.25%

Lowest P/E
Sector Medical, Precision & Optical Instruments Motor Vehicles And Auto Parts Financial leasing Real Estate And Construction Cement, Lime & plaster Technical & Engineering Services Textiles Chemicals & By-products Refined Petroleum Products & Nuclear Fuel Banking and other Monetary Institutions Average P/E
3.49 4.56 4.62 4.85 4.86 5.36 5.65 6.16 6.35 6.46

Percent of Market Cap.

0.08% 5.52% 0.45% 1.26% 2.79% 2.11% 0.21% 4.09% 2.55% 21.95%

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Iran Market Reporter No. 6 Oct 2011 ( Issue 6, Vol. 1)

Fund | All Funds Overview

Top 10 Best Funds (Regarding return rate)
Working Days NAV (Rial) Asset Under Man- Last Month Last 6 Last 12 Since Inception agement (USD)1 (%) Months (%) Months (%) (Compound Return)
14,289,972 3,976,973 6,462,117 8,201,671 35,375,023 4,894,893 4,294,893 10,011,792 1,955,989 1,272,238 -1.90 -2.90 -0.40 -3.40 -1.70 -6.00 -3.10 -1.70 -4.60 -1.30 -3.00 -0.90
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836 3,033,881 Boursiran 561 2,023,990 Ganjineh Bahman 1,270 4,850,961 Melli Bank 1,181 4,338,942 Agah 2 623 2,146,418 Momtaz 709 2,382,313 Farabi 594 2,047,258 Novin 2 1,271 4,315,515 Pishtaz 1,288 4,092,072 Sahm Ashena 716 2,088,661 Amin TEDPIX All Funds Index3 1 USD to Rial exchange rate: 10,770

1.80 0.90 -1.70 -4.00 4.00 -4.30 5.90 2.00 -6.10 -2.30 1.50 3.90

53.40 52.20 42.50 41.90 46.20 47.60 64.50 50.90 40.50 47.00 43.90 32.00

62.30 58.20 57.40 57.40 56.40 56.30 55.30 52.40 49.10 45.60

Managed by Mofid

Including 60 Funds

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Iran Market Reporter No. 6 Oct 2011 ( Issue 6, Vol. 1)

Fund | Pishtaz
Commentary
Systematic risk of the TSE has risen recently, so market capitalization it is also one of the largthere is a temptation to move towards bonds est sectors of Iran Capital Market. and sukuk which have guaranteed fixed reBanking sector has been beaten down turn up to 17.5 percent per year. recently, so it seems a prime hunting ground Telecommunication sector also has been for us. Some specific banks in this sector are one of our largest positions in the Pishtaz attractive and we expect an increase in their fund, due to its low risk and growing market prices in the following month. in Iran. With more than 13 percent of TSE total
Pishtaz Mutual Fund Inception date Working Days Asset under managementM Rials 1 Month 3 Month 6 Months 12 Months Life (Compound Return) NAV (Rial) 12 Months Hight Low
May 9, 2008 1271 107,827 -1.70% 4.40% 2.00% 50.90% 52.40% 4,315,515 4,446,214 2,842,097

Funds Composition Farabourse Banking and other Monetary Institutions Telecomunication Metal Ores Mining Holding Other Industries

Percent
24.39 16.22 17.65 11.04 8.02 12.28

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Iran Market Reporter No. 6 Oct 2011 ( Issue 6, Vol. 1)

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Fund | Momtaz
Commentary
After 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
Momtaz Mutual Fund Inception date Working Days Asset under managementM Rials 1 Month 3 Month 6 Months 12 Months Life (Compound Return) NAV (Rial) 12 Hight Months Low
Feb. 16, 2010 623 380,989 -1.70% 4.80% 4.00% 46.20% 56.40% 2,146,418 2,230,904 1,473,055

the next 3 to 6 months. Therefore we are cautiously 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.
Funds Composition Farabourse Banking and other Monetary Institutions Telecomunication Metal Ores Mining Holding Other Industries Percent
20.74 16.77 16.53 14.49 8.22 13.50

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Iran Market Reporter No. 6 Oct 2011 ( Issue 6, Vol. 1)

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Fund | Pishro
Commentary
Due 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
Pishro Mutual Fund Inception date Working Days Asset under managementM Rials 1 Month 3 Month 6 Months 12 Months Life (Compound Return) NAV (Rial)
Apr. 20, 2011 195 325,637 -2.00% 4.60% 6.40% 3.70% 1,036,658

banking sectors will outperform the TEDPIX, therefore we are overweight in the above sectors. We are also planning to invest in following IPOs in the next month in order to enhance our NAV and therfore our return.
Funds Composition Farabourse Banking and other Monetary Institutions Telecomunication Metal Ores Mining Basic Metals Other Industries Percent
26.30 16.47 15.63 13.47 6.20 12.41

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Iran Market Reporter No. 6 Oct 2011 ( Issue 6, Vol. 1)

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Commodity | Summary
Iran Mercantile Exchange
Almost 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 suppliers enter the market. Last month 150,000
Groups of Product Industrial Agricultural Oil & Petrochemical Mineral Total Export Ring Domestic Ring Export Ring Domestic Ring

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.
Value (USD)
12,477,829 613,871,496 25,581,962 110,893,979 335,942,920 1,098,768,186

Percent
1.14% 55.87% 2.33% 10.09% 30.57% 0.00% 100%

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Commodity |
Iranian Rial Exchange Rate (As of September 30)1
Code Currency USD United States Dollar GBP Pound Sterling CHF Swiss Franc AED United Arab Emirates Dirham KWD Kuwaiti Dinar JPY100 Japanese Yen HKD Hong Kong Dollar OMR Omani Rial CAD Canadian Dollar TRY Turkish Lira QAR Qatar Riyal SAR Saudi Riyal BHD Bahrain Dinar CNY Chinese Yuan MYR Malaysian ringgit EUR Euro 1 Official rates according to Central Bank of Iran (CBI)

Exchange Rate

in IRR
10,770 17,209 12,333 2,933 39,309 13,610 1,387 27,974 10,755 6,130 2,959 2,873 28,568 1,696 3,503 15,075

Compared to Last Month (%)

0.28% 2.49% 2.83% 0.27% 1.17% -2.99% 0.58% 0.28% 3.28% 6.02% 0.31% 0.31% 0.29% 1.01% 3.82% 3.00%

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News
Tehran Stock Exchange index up 46 percent
October 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 TSEs general 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 realized while many members of the World Federation 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. In this review, Tejarat Bank, Post Bank, Calcimin 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 The TEDFIX 30 is a total return index weight- Fund Investment Co. were deleted from the index. ed by free-float market capitalization that measures the performance of 30 most traded Index components are selected accordstocks listed on Tehran Stock Exchange (TSE). ing to the market capitalization and liquidity
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News
criteria. 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.
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Iran Market Reporter No. 6 Oct 2011 ( Issue 6, Vol. 1)

News
The Value of IMEs Transactions Jumps by 88%
October 12, 2011 IME: The value of transactions at IMEs 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 IMEs trading floor. This data indicates that the volume of transactions is also 10 pct more than that of last years similar period. The report adds that about 56 pct of the volume and 43 pct of the value of transactions were devoted to industrial and mineral commodities. On the other hand, 2 million tons of oil byproducts such as bitumen, vacuum bottom, base oil and etc. were traded at the value of USD 1 billion. Moreover the value of petrochemical products trading reached to USD 1.4 billion. However, transaction of agricultural products saw a free fall and experienced 93 and 75 pct decrease in volume and value of trade. According to this report, the volume of futures 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 IMEs transactions. According to the report by public relations and international affairs, On Wednesday 19th
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October, 150,000 tons of iron ore produced by Mishdovan and Jalalabad firms traded at IMEs trading floor. The value of the transaction reached to around USD 10 million. The report adds that the Mishdovan iron
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Iran Market Reporter No. 6 Oct 2011 ( Issue 6, Vol. 1)

News
ore was traded for 67 USD per ton and Jalalabad 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.

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Iran Market Reporter No. 6 Oct 2011 ( Issue 6, Vol. 1)

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