Federica Mogherini announced at the beginning of 2016 that the European Union must start high level negotiations with Iran in fields such as energy and commerce. She further continued to stress out that the European commission is going to start new economic relations with Iran. She also clarified on this point the European commission must prepare the conditions to resume economic and business relations with Iran as soon as the international sanctions are relieved.
Companies have released their 1Q financial statements which were concerning in some sectors. The recession dominating all sectors seemed more worrying than the last year’s. Most companies’ profit margins were descending and if this recession is going to continue, more severe circumstances can be assumed.
The minister of commerce, industry and mine stated that Iran expects to re-join SWIFT, the international electronic payment network within three months after sanctions’ relief; therefore, as he argues this might help pave the way for foreign companies to participate in privatizing Iran’s economy more easily. Experts believe that since Iran’s economy has been isolated and dependent specifically on the energy sector for a long time, the window of economy should be opened to foreign investors upon the relief of sanctions to smoothen the trade-off between the both parties.
General circumstances and conditions surrounding the capital market is the same as what we mentioned earlier and the market benchmark is an undeniable proof to this claim. The stock prices intend to correct and modify and the only element to help them appreciate in value is fundamental information to be seemingly improved most probably in the next quarterly reports. Currently, the market is demonstrating reactions to AGMs’ reports on the 1Q financial statements and the poor far from expected distributed dividends that were aggravated with extremely low budgetary coverage of most listed companies on TSE. We can refer to a multitude of factors contributing to and corroborating the current dilemma in the Tehran Stock Exchange that has stirred the problems. To start with is the continuous and on-going recession combined with decline in the inventories prices both in domestic and international scale.
According to TSE data, the benchmark plummeted down 1183 points or 1.72% to stand at 67.644 during trading session ended on July 24. There were some reasons resulting in the index’s standstill and stopping it to go upper touching new ceilings. Some believed that the TSE authorities manipulated the gauge and controlled it not to experience new levels due to their own reasons.
Agah mutual fund is a pioneer fund in the capital market of Iran. Since its inception date, it has made more than 1500% return for its unit holders. This fund enjoys a professional management team and in terms of its combination, Agah fund components are picked up out of different sectors in the capital market.
As it was predictable in this industry, estimates for the first quarter for the financial institutions do not appear to be appealing due to unprecedented increase in doubtful receivables in financial statements of the related banks. The leader among the shares in this field is Saderat Bank which has realized 12 percent of its profit forecast in the first quarter of the Iranian fiscal year ending March 20th. This is largely because of SWIFT embargoes on this bank and the immense amount of non-performing loans that are not paid back as a result of poor economic conditions and the high rate of interest which is a record of its kind in the world as the minimum is below 10 percent compared to that of above 20 percent in Iran. Nevertheless, we should say that the future for this sector is promising in the aftermath of the nuclear deal.
The stock market ended the previous trading week with downward trend despite the positive outcome of nuclear talks and its end result that might culminate in a much better economic conditions. However, what the participants of the market witnessed was extremely opposite to their expectations due to some sound reasons explained in the daily market news.
Neishabour Sugar Company released its financial statements for its 9-month period ending September 22, 2015. Holding 200 IRR bn capital, this company recognized 115 IRR loss per share; last year, it had recognized 189 IRR EPS with 81 IRR bn. Furthermore, although this company had predicted to suffer 36 IRR loss per share until the end of FY2015, it increased that amount to 148 IRR for the whole current year.
Having deeply delighted by and overwhelmed with the final agreement with P5+1and Iran, the participants in the market were utterly moved and shocked by the stocks laggard in the market while it seemed that the circumstances were provided for an upward rally in TSE. What has always been interesting regarding the market is the unpredictability feature that is the indispensable component of all equity exchanges and TSE is by no means an exception. Bearing this in mind, there are some causes that end in effects we saw during past trading days including today: