Inflation Shadow Over Iran’s Economy Shoulder!
– The CBI statistics on Iran’s Economy components in Aban month (Oct. 23-Nov.21) demonstrate a change in the money supply face; money volume has increased by 3% over the quarter ended in Aban, while it had grown 1.5% in the same period last year. Furthermore, the near money experienced a 4.4% increase over the period while it had gone through a 6.3% rise in the previous year. In 30 days ended November 21, 2017, the money volume grew up by 4.1%; but the near money only added 1.2%. In economy, near money can be described as a shelter for money itself; mostly due to fact that a rise in this component of a nation’s money supply would fuel the banking resources and has a lesser effect on the inflation. On the other hand, money volume growth will push the money supply in to an ambush state. The slightest trigger in one of commodity markets (e.g. Forex and gold) would release the volume to said markets and the result will be stamped as inflation. In fact, it appears that after the usually expected rise in USD in Mehr, which was attributed to demand growth, a part of the freed money was directed to the forex market, which justifies to some extent the recent intense speculation and therefore, the ongoing growth in foreign exchange. Such a situation requires monetary policy makers to come up with a new method for managing money supply and not allowing the attempts to bring down inflation rate into the one-digit zone to go in vain.
– With the reception of 4 Islamic treasury bills new issues, Iran debt market is to become the most diversified in terms of government debt securities. The Iranian parliament allowed the government to settle IRR 260,000 bn of its liabilities via these securities and the new listings are approximately accountable for 23% of that figure. The table below demonstrates the size, maturity and ticker of new T-bills.
– Stressing on the operation of Iranian banks within international regulations framework and ongoing attempts to improve and fully comply with globally accepted standards, the governor of the Central Bank of Iran discussed the possibility for Iranian banks to open branches in Switzerland in a meeting with the Swiss ambassador to Tehran. The Swiss envoy promised to negotiate this proposal with their banking officials to accelerate the process.
In the Market
Despite the decline among names in the Oil Products space with most tickers losing 1.5% on average, nearly the whole Automotive industry finished in the green with many spare part mfg. companies ending with buy queues; the probable 10-20% rise in their products along with rumors on the formation of a consortium of spare part mfg. companies to purchase Iran Khodro block share seem to be driving such a growth in today’s session. The 5th international Conference on Iran Automotive Industry in the current month, which will host major carmakers like Peugeot Citroen, Renault, Volkswagen among other and their spare part mfg. companies might also be another reason behind such positive movements.
The Metals group settled with balanced to negative trades with names like Iran Pipe & Machinery Mfg. and Zangan Zinc Industries facing buy queues. A similar atmosphere was seen in the Iron Ore industry as well following the recent rise in global metals, mostly zinc, prices. Mines & Metals Development ticker, halted due to its 29% positive EPS adjustment for 2017/18, returned to the market at IRR 1,828, shedding 1.7%.
According to the Iranian Mines & Mining Industries Development and Renovation Organization, 6.3 mn tons of steel, worth $2.34 bn were exported mostly to Italy, Turkey, Belgium, Iraq, etc. over the 9-month period ended December 21st; such a figure posts a 23% and 3% jump in volume and value compared with the same period last year. In addition, the 8th Iranian Steel Market Conference opened today; different issues, including balanced development of Iran’s iron ore and steel industry production and focus on export-oriented high quality steel production, will be discussed.
DISCLAIMER: This report has been prepared and issued by Agah Brokerage Firm on the basis of publicly available information, internally developed data and other sources believed to be reliable. The information contained herein is not guaranteed, does not purport to be comprehensive and is strictly for information purposes only. Agah does not assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions. Any expressions of opinions are subject to change without notice.
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