Iran Capital Market fundamentals analyzed by Agah Group!
– After the recent fluctuations of Iran Capital Market, which was mostly due to unprofessional behaviour of inexperienced investors along with uncertainties of upcoming political situations, there were some concerns with regards to the future path of the stock market. Agah Group analyzed the current situation of the Tehran Stock Exchange and Iran Fara Bourse with an eye on the USD/IRR rate:
This first chart shows that the average rate of the total market cap to money supply volume has always been around 40% historically. Now, this figure is around 44% which considering all the newly IPO companies is not very high. On the economic collapse of 2013/14, due to first heavily imposed US sanctions, this ratio reached almost 90%.
The second chart demonstrates the USD value of Iran Stock Market during the past 10 years. The USD 54 bn worth the capital market of the nation (@USD/IRR 142,000) is nowhere near the levels of 2013/14 which was more than USD 160 bn. Analysts believe that the market has the potential to reach the above figure average.
The last picture is for the dollar adjusted the overall index which interprets in the following words: The overall index of 2013/14 was on a higher level than the free market USD/IRR rate of then by 3 times. This number stood at 1.23 for now which is even below the historic average.
In general, all the above analyses point to the fact that there are no concerns threatening the capital market for these days in terms of overvaluation or bubble situation and the market can advance at least to reach its historic averages.
– On Wednesday, another piece of Islamic Treasury Bills is to offer on Iran Fara Bourse for the first time. TB34 worth IRR 961.74 mn (USD/IRR 42,000) and will be matured on 12 October 2020. Excluding the soon to be offered issue, as of today, there are 23 outstanding issues of ITBs in Iran Debt Market with DTMs of between 50 to 819 days. Moreover, with the advancement of equities and more calm situation of the economy, the risk-free rate has been fallen to 17% channel again. The below image shows the details:
– Iran Fara Bourse announced that the underwriting period of Pension Fund’s Technology venture capital fund, a new VC fund in Iran alternative investment ecosystem, will be carried out from Oct 17-27, 2018. This new fund has IRR 100 bn (USD 2.38 mn) in capital and a 7 year activity period. 20% of fund’s assets have been paid by the GP and the rest is committed by other LPs. Each investment unis costs IRR 1,000,000 ($23.81).
In the Market
Equities performed far better than expected today and it seems the capital market train is back on its track after all. TEDPIX (+3.30%) jumped for more than 5,700 points and stood at 180,601.31 level. IFEX (+3.51%) did even better and recouped a good chunk of its last days’ losses. The trading volume and value of both markets reached pre-crisis levels again and the analyses show that just today a figure of IRR 1,275 bn (USD 30.35 mn) has been injected by the retail investors to the market.
Market experts hope that this time the capital market advance do not be so as its previous ride which literally all tickers regardless of its fundamentals have risen in a herd-like manner. Now it is time to focus on the fundamentally sounded components who can bring profitability even after the US imposed sanctions deadline.
Today’s move was mostly pioneered by blue-chip tickers of Oil Products (+3.48%), Metals (+3.50%) and Chemicals (+3.93%) sectors while some other smaller industries, like Transportations (+4.70%) performed handsomely as well.
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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