Central Bank of Iran Directive Effect on the Market
The implementation of the Central Bank of Iran directive on bank interest rates has been repeatedly mentioned to exert positive effects on the capital market. However, the recent positive trend taken by the market indices in the past week seems to be more arising from the influence of commodities prices growth, largely metals, in global markets and not in tandem with lowering the said rate. Investigating the stock market behavior when faced by such news shows that lowering the interest rate by decree has lost its power to effect the stock market psychologically. Despite the CBI continuous attempts to lower this rate at different times, the deposit rate’s stickiness to higher rates has been a huge impediment ahead. In the CBI previous attempts, banks had to resort to instruments like preferred deposit accounts and Fixed Income investment funds to ditch the directive because they had been hit hard by credit crunch, which in fact seemed to be the main cause of sky high rates. This time, on the other hand, the CBI is way more serious and has offered motives for those respecting the rules and punishment for those who don’t; the CBI has been heard to anonymously send agents to banks’ branches to supervise the implementation of the plan. The stock market, nevertheless, still seems to be waiting to feel the actual effects of this action, although some banks’ attempts to absorb money with higher rates (up to 23%) before the deadline ends (September 2) appeared to fail shareholders to some extent.
Expecting a decline in rate on banking facilities after lowering interest rate, an official in the SEO announced the fixed-income investment funds’ new bank deposits cap to be up to 50%; in case more than 50% of resources are deposited at the bank, the fund manager will be eligible to get commission for up to 50% of the deposited amount. In this regard, an instruction is being prepared and will be announced within a few weeks. Regarding the management fee, he added that it will be a percentage of the whole deposited figure.
In the Market
Benefiting its shareholders with 140% return in 18 sessions in a row, the IRR 100 bn worth Mobin One Kish Company, in the IT & Communication sector, managed to close with a buy queue in today’s session as well. Being asked on the reason for such a stunning growth, a directive in the company stressed that the company is moving in line with its development plans and intends to even go beyond that; he also added that the IPO was done at a very cheap price, which justifies the growth so far. Referring to the 4,000 shareholders who sold their shares in the past week, he also said that the share is estimated to be traded in a balanced manner until the end of the week. He then, mentioned the company’s commitment to the Iran Fara Bourse on offering another 10% in the market, which might be either in retail or a block trade. He then, stated the company’s plan to raise its capital by at least 50% which will become operational in the next year.
Among names in the Transportation industry, Sina Port & Maritime Services Development and Rail Pardaz-e Seir were the top gainers, ending 4.4% and 3.6% higher respectively.
The newly IPOd company in the Hospitality sector, i.e. Hotel Parsian Kosar-e Esfahan, went up 5%.
A rather positive sentiment dominated the Chemicals industry with Tuka Paint Foolad Sepahan and Pars International Products going up 4% with Lo’abiran and Sina Chemical Industries as the laggards.
Apart from Iran Tractor Forging, Ravan Fanavar Industrial Engineering and Iran Lent, the whole Automotive space settled with slim losses. Saipa also shed 2.35% in its price finishing at IRR 1,161.
Finally, the majority of tickers in the Oil Products sector, on the other hand, finished high above their flat lines, led by Esfahan Oil Refining (Shepna) which pushed Tehran Oil Refining and Tabriz Oil Refining towards closing with buy queues, too; Shepna is expected to positively affect its EPS, which is estimated to add IRR 460 per share to its retained earnings.
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