Earnings at Iranian listed companies are estimated to be 9% lower in the coming year thanks to the impact of low oil prices.
The predictions, for the financial year ending in March 2016, represent the first time since 2009 that estimated earnings have fallen compared with the previous year. The petrochemicals and refineries industries posted especially reduced earnings, causing investors to sell stocks.
“Refineries were the worst performing group in March as their stock prices fell by 48%, the highest monthly decline ever for a single listed industry on the Tehran Stock Exchange,” says a report by Turqoise Capital, an asset manager based in Iran.
Iran is currently isolated from global capital markets because of a sanction that bans Iranian institutions from using the Swift settlement system. Many investors hope the ban will soon be lifted now that Iranian and western negotiators have made progress on a deal to limit Iran’s nuclear ambitions.
Iran’s stock market is attractive to frontier market investors because the average price-to-earnings ratio is just 5.1 times, as of March, which implies Iranian stocks are cheaper than stocks in most other frontier markets. The capitalisation of the Tehran exchange was $104 billion at the end of March, according to Turqoise Capital.
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