Fighting the Correct Cause
Dragging the inflation rate down from 40% to 10% by the current administration is regarded as a major accomplishment, which was supposed to lower the interest rate as well. However, the current credit crunch and high demand for facilities have neutralized such great steps.
Experts believe that high interest rate originates, in fact, from the imbalance between credit supply and demand, and the government should have targeted such a crunch as the cause instead of directly attacking higher interest rate as the effect. In fact, the government lowered this rate by 15% by decree and obliged the Central Bank of Iran to allocate a mega credit line for banks increasing banks’ overdraft rate from 33% to 14%.
Such attempts acted as a powerful painkiller, putting a temporary end to the interest rate fever; with its effects gone to some extent, however, this fever was predicted to come back even stronger. In this regard, such experts encouraged the government to focus on the settlement of its debt to banks, as a large part of this problem, which was suggested to be done through launching an active debt market.
In implementing this proposal, the government hit the larger problem of high interest rate for long term bonds, which used to limit the government power in issuing such bonds. To tackle it, the acting administration resorted to issuing short-term treasury bills, which was criticized at the time by some economists, hoping to remain in control of the interest rate; unfortunately, this not only did not resulted in the creation of a debt market, it also increased the interest rate, harming the money and capital markets as well. It was so while those opponents had suggested the issuance of 5-10 year treasury bills partly backed by future oil revenues and with fixed purchase power (for instance based on credible foreign exchange indices) and the interest rate in line and proper with international debt markets (for example 6% considering the country risk) to settle a part of its debt to banks and economic practitioners.
This is so, that despite the government success in inflation control, the public has not yet felt and enjoyed the tangible effects of this great accomplishment, which calls for more attention to defining and implementing monetary policies.
Being a challenge for Iranian companies in attracting foreign investment, Tose’e Melli Investment Group, as a listed company, managed to prepare its IFRS-based financial statements to the Securities & Exchange Organization of Iran.
Behshahr Industries Development has estimated to make IRR 175 EPS for the FY ending 20 March 2018, positively adjusting its previous estimate by 5%; the company has managed to cover 10%, equal to IRR 19 in the first quarter.
Iran Khodro Diesel has predicted to realize IRR 607 loss per share for the FY ended 20 March 2018, negatively adjusting its predictions by 15%.
In the Market
Following the previous session, several tickers in the Non-Metallic Ores space settled with good gains, including Tuka Refractories and Iran Refractories which went up more than 4%.
Except a few active in spare part mfg. area like Motorsazan Iran Tractor and Iran Automobile Spare Parts, most Automotive companies ended beneath their flat lines with slim losses. The reopening of Saipa ticker is supposed to move this space; the CEO of Saipa has announced negotiations between this company and Nissan and Kia, saying this ticker will be reopened before its general annual meeting on July 22nd.
In line with the recent growth in metal prices, a great number of tickers in the Metals sector witnessed positive trades; some like Iran Pipe & Machinery, Calsimine and Iran Ferrocilis closed with good gains. A similar atmosphere was seen among tickers in the Iron Ore group as well, with Iran Zinc Mines Development, Bafq Mines and Bama being highly demanded.
Having held its general annual meeting and distributing IRR 900 dividend, Mapna ticker, in the Engineering industry, was reopened at IRR 12,100 with a buy queue.
Most symbols in the Banking sector were positively traded, led by Bank Middle East; the ticker is planning to raise its capital by 60%.
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