Under circumstances of sanctions and Covid-19 outbreak, where many petroleum industry companies had to restrict or even halt their production, petrochemical companies continued their normal production and supply of products. That proves the petrochemical sector remains a reliable industry.

The experience of previous years in the mercantile exchange shows that petrochemical companies have often distributed attractive dividends among shareholders. That is why some petrochemical companies are attractive to investors looking for annual profits. Such features have also pushed people to direct their investment to the stock market.

Stock market indices have been on upward and downward trend; however, petrochemical stocks have always shown to be spared any decline. That explains why petrochemical shares are largely attractive.

Economists believe that state assets listing would give rise to such economic benefits as profitability, removing budget deficit, encouraging people to invest in the stock market, deepening the capital market and preventing any market bubble.

The capital market is largely prosperous these days. With the listing of state assets on this market, people are encouraged to invest in the stock market and their capital would not move towards gold and foreign currency. Moreover, people would get further familiar with the capital market and their knowledge of finance would grow.

Successful Players

Petrochemical stocks are warmly welcomed in the stock market. The Pars, Nouri and Shahid Tondguyan petrochemical companies were the first petrochemical companies to list on the stock market successfully. Now, more petrochemical companies are subscribing to the stock market with at least six of them being subsidiaries of the Persian Gulf Petrochemical Industries Company (PGPIC).

Arya Sasol Petrochemical Company was expected to list on the stock market in March, but the Covid-19 outbreak created some restrictions. However, the important issue is that even news of petrochemical stocks listed on the stock market would shake the market. Among 40 top companies named by the Securities and Exchange Organization (SEO), there are some petrochemical companies. The reason for this selection is the significant improvement in their financial performance.

Shazand Petrochemical Company, Pars Petrochemical Company, Kermanshah Petrochemical Industries Company, Pardis Petrochemical Company, Kharg Petrochemical Company, Persian Gulf Petrochemical Industries Company, Zagros Petrochemical Company, Maroun Petrochemical Company and Ghadir Petrochemical Company are among the 40 companies with big impact on the stock market last calendar year.

Those who follow stock market developments should know that petrochemical stocks have become influential in everyday trading. However, the effectiveness of petrochemical companies in the stock market and initial public offering that have breathed fresh life into the stock market are owing to decisions made by the Downstream Petrochemical Industries Development Department.

Owing to cooperation and interaction between this department and the Ministry of Industry, Trade and Mine as well as the Iran Mercantile Exchange, a transparent and lucrative market is seen.

Jafar Rabiei, CEO of Persian Gulf Petrochemical Industries Company, has said that the Arvand, Bu Ali Sina and Bandar Imam petrochemical companies would soon list on the stock market.

Noting that the capital market was warmly welcomed, Rabiei said: “The stock market is not a place for people to become rich overnight. Anyone entering the stock market hastily will undoubtedly suffer losses.”

He added: “The stock exchange has a higher yield compared with other markets. Certainly those who are eying long-term investment of more than one year would make more gains in the stock exchange than in the gold, foreign currency and other parallel markets.”

Regarding alleged bubbles in the stock market index, he said: “A small segment of money stock has so far entered the capital market and there is still hot money that has yet to enter this market. I don’t believe that the government has deliberately intervened to make the stock market index green in a bid to sell its own stocks. Rather, I believe that the capital market convinced the government to sell its own stocks on the market. Put simply, the market attracted the government, which was a positive development. The government was finally convinced to offer its shares on the market. I believe that we have very good stocks in the market that have yet to reach their natural prices because they are still being traded below the net asset value (NAV).”

“Investment and holding companies enjoy good potential for growth. They will make very good profits and distribute high dividends so that people would be able to purchase stocks at lower prices,” he said.

Rabiei said PGPIC was holding about 40% of Iran’s petrochemical market. PGPIC is also accounting for 40% of Iran’s petrochemical exports.

PGPIC and subsidiaries hold about 12% of the capital market. Their share exceeds 42% in the chemical industries.

He said that PGPIC is a major player in the capital market and it has already offered many of its subsidiaries on the stock market. He added that the remaining companies would list on the stock market in the current and next calendar year.

“We plan to bring three more companies into the stock market: the Arvand Petrochemical Company, which is known as the PVC giant in the country, Bu Ali Sina Petrochemical Company, which is similar to the Nouri Petrochemical Company, and the big aromatic plant in Mahshahr,” he said. “After that, we would be able to introduce the Bandar Imam Petrochemical Company, the largest petrochemical company in the country, on the stock market.”

Rabiei said: “I don’t think that anyone has suffered losses after purchasing shares of Pars Petrochemical Company, Nouri Petrochemical Company and Shahid Tondguyan Petrochemical Company. However, nobody should purchase or sell stocks emotionally.”

“If those who purchased these stocks wait at least one year I am sure that they will make big profits out of PGPIC’s newly-offered stocks. Nobody has to worry about the index slipping into the negative territory for several consecutive days. That’s natural for the stock market and I assure you that good days are awaiting the stock market,” he said.

Petchem Stocks

The bulk of petrochemical companies’ stocks may be in the hands of a bigger petrochemical firm. In other words, these stocks are negotiable by these companies. However, as long as the market conditions are bullish it would be lucrative for other shareholders, too. Therefore, this issue must be taken into consideration in the purchase of stocks. Many companies would be faced with restrictions in production, distribution and sales in coming months. Petrochemical companies would continue their work and global developments also show that this bullish trend would continue. Therefore, these companies would be able to remain highly lucrative options in the capital market. Most items petrochemical needs are polymer products that exist in the country and most petrochemical companies do not need to communicate with foreign entities. That would be instrumental in blunting the impact of sanctions on the Iranian economy and facilitating circumvention of sanctions.

Courtesy of Iran Petroelum