Ground for Iran’s Capital Market Growth
Among the most important news breaking in the past week was the lowering of interest rate by 15% by the Central Bank of Iran, which is supposed to exert positive effects on Iran’ Capital Market. In fact, lowering this rate can contribute a lot to absorbing liquidity to the market; it will decrease listed companies’ interest expenses leading to their higher profitability. In addition, the governor of the CBI has also announced the lowering of interest rate on facilities in the upcoming future.
At the first sight, many might not be able to see the difference between the previous times such a promise was made by the CBI; complains by (mostly private) banks’ shareholders about their huge losses compared with high returns paid to depositors have played a significant part in making the CBI more determined than ever to deliver this promise this time, in addition to its necessity in blowing a fresh breath to the banking system.
To make that happen, the CBI took a firm step in confronting un-authorized/supervised credit institutes, those which used to prevent the correct implementation of the CBI instruction by adding fuel to the fire of unhealthy competition. The other taken measure was the CBI’s more active presence in the interbank market in order to help banks with their required liquidity to meet granting facilities decreed by the government; this body also turned banks’ overdraft, which imposed high fine rates, into credit lines.
The recently taken step, by the newly elected Minister of Economy and Financial Affairs, was the abandoning of Islamic Treasury Bills out of the stock market, which will not only boost the debt market, will also pave grounds for the flow of funds into the capital market. At the end of the past year, such bonds were stated as the rivals for the capital market, which led to stopping their trading in the debt market; unfortunately, however, it made the situation worse by creating an unauthorized market in addition to the sky high return rates. In his meeting with the Head of the Securities and Exchange Organization of Iran, trading such banks will be resumed in the stock market from next week.
All in all, these are supposed to exert positive effects on the market, which if ignoring the usual trend seen at the end of summer, i.e. clients settling the credits received from brokerage houses, which itself result in high sales pressure, can contribute significantly to the growth of the market.
In the Market
A positive sentiment was seen among tickers in the Sugar space at the start, which almost reversed the more we approached the end of the affair. Lorestan Sugar was the only keeping its buy queue. Naqsh-e Jahan Sugar ticker was reopened at IRR 7,910, 7% higher. Having adjusted its estimates by -64%, Neishabour Sugar also returned to the market shedding 2% at IRR 2,618 and closed with a sell queue, eventually.
The majority of names in the Chemicals groups opened modestly higher with Zagros Petrochemical, Fanavaran Petrochemical, Khorasan Petrochemical, Saina Hygienic Industries and Kharq Petrochemical closing with buy queues. Having held its extraordinary AGM and elected its board members as well as a 25% positive adjustment, Pardis Petrochemical ticker was reopened 3.3% higher at IRR 5,505.
The continuance of commodity price growth in global markets have still kept investors interested in companies listed on the Metals and Iron Ore industries; National Iranian Copper Industries in the former and Gol-e Gohar Mining and Industrial in the latter closed with buy queues.
Companies like Electric Khodro Sharq, Motorsazan Iran Tractor, and Khavar Spring Mfg. in the Automotive industry faced buy queues. Other companies went through kind of balance trades.
Finally, symbols in the Construction group were traded in a balanced trend as well led by Fars Civil & Development (+2.84%). Having applied a 104% positive adjustment to its predictions, Azerbaijan Development Investment ticker was reopened 4% higher.
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