Iran’s Economy Monetary Inflation; a trinity of causes!
– “Project financing policies”, “Government’s debt to central bank on budget deficit” and “Private sector being under pressure” are the triple factors influenced banking resources and made monetary base of Iran’s Economy impacted directly. This is while the state vowed for a decentralization from banks and moving towards the debt market. Stats show a 41% growth in government debts over the past 7 months that led to an expansion in monetary base. Now banks are obligated to finance prime projects with facilities in 15 working days. 79.1% of project financing fueled from money market while only 19.5% have been channeled to debt market.
– CBI allowed businesses to access banking network purchasing FX. Banks were permitted to trade currency at street rates before and now it is a chance for different syndicates to meet their currency needs. Central bank also vowed to provide importers with necessary FX in cash. Approaching the new Christian new year, the market has always seen an upward trajectory for foreign currencies, specially US dollars. The fever will eventually cool down and everything goes back to normal, yet the CBI measures injecting more FX into markets this time of year, would bring more logic behind currency trades.
In the Market
As the closing bell approached, the stock market went further down to discover new lows in a sleepy, range-bound, action. The TEDPIX finished the day with 262.92 negative points (-0.33%) and other indices followed the trend as well.
Metals were atop today rallying to dive more deeply into the red. National copper industries was the leader lost near 2.5% on the last trade (IRR 1,940). The situation for Isfahan Mubaraka Steel was no different with higher volume. Almost 10 mn shares of the Steel giant changed hands today and the ticker closed at IRR 1,382 (-1.14%). Other sector’s small caps tried to compensate a bit for whole but trading volumes were disappointing.
On the other side of the board, conditions for Construction sector were drastic. Iran Construction investment company (SAKH1) announced a negative adjustment of EPS and opened almost -18% lower. With 1.6 mn traded shares the company stamped the 5th worst impact on today’s index. The whole sector’s average showed a relative weakness of -3.55% and nearly every stock in the industry closed in red.
Finally, in the absence of “Saipa”, auto sector has still nothing to offer to investors. A bouncing trade trend over the past week is a proof of incapacity in the sector. Only day traders are now have faith in short term speculating trades and fundamentals are no convincing enough. It is safe to say that almost all the sector tickers ended with losses on today’s session.
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