Life insurance accounted for 14.8% of insurance industry’s earned premiums in the first quarter of the current Iranian year (started March 20, 2016), growing 2.9% YOY, compared with 12.6% of the same period, the preceding year, showing a 2.2 percentage points.

According to Central Insurance Company of Iran, acronymed as CII, in the spring season, insurers sold   7.7 trillion rials ($220 million, at unofficial exchange rate) premiums by issuing more than 776,000 life insurance policies.
The rise in life insurance class in insurers’ portfolio seems to be the result of consecutive cuts in banking sector’s interest rates kick started in the year before.

In the meantime, while lenders were paying approximately 15% interest on one-year deposits, insurers were offering 18% interest on five-year term life policies.
However, the recent mandate by the Supreme Council of Insurance Industry, the regulator, to lower the maximum rate of return to 16% for two-year term life insurance is deemed to hit insurers’ revenues from the category in the following months.

Based on the ruling by the council, insurers will have to offer approximately 16% returns on two-year term life insurance policy (cash-value life insurance). The rate for four-year term policies is also set at 16% for the first two years and 13% for the rest of the period.  For periods exceeding four years, insurers are allowed to offer only 10% return. The ruling will come into effect August 20.
Iran Insurance Company, the state-owned giant, Pasargad Insurance Company–owned by Bank Pasargad– and Karafarin Insurance– an affiliate of Karafarin Bank– were major contributors to life insurance in the period.

Foreign Direct Investment trending up

Foreign Direct Investment (FDI) accelerated after the historic nuclear agreement (Joint Comprehensive Plan of Action) reached between Iran and EU3+3 in January, cited  Head of Management and Planning Organization, Mohammad Baqer Nobakht.  These investments are mostly in transportation, renewable energy, tourism, recycling, electronic industries, food and machinery, he noted.
TFDI was shy of $920 million for 41 projects, in the financial year 2014/15, before the implementation of so called JCPOA, according to the same official. After the nuclear deal, in the six months to 5^th August of the current Persian year, the country succeed to attract more than 5 billion dollars for 66 projects in FDI, according to him.

Solution for high cement inventory

There are over 16 million tons of cement in surplus currently in cement factories’ warehouses hit by low demand in the domestic market, according to deputy minister of industries, mining and trade, Jafar Sargheyni.

The Iraqi market–which was once the main destination for Iranian cement–was the major foreign buyer of the product to help dealing with prolonged recession in the construction sector.

Since the time the Iraqi government banned imports from Iran in April, Iranian cement manufacturers have been seeking alternative markets.

The government, in order to give a hand to the manufacturers, started to sponsor the recession-stricken sector by offering energy subsidies to the shipments of the commodity to African countries as it was not cost-efficient to export the product to distant destinations.

In this vein, the first cargos were sent to Tanzania and Egypt, while an agreement has been signed with Haiti for exports to this Caribbean nation.

In the market

Tehran Stock Exchange’s All-Share Index dipped after 17 consecutive rally, climbing up about 6.7%, on the final day of its upward movement on Sunday. This big growth in the gauge had last been seen 3 years ago in October in the exchange market. But the momentum lost speed yesterday and the overall loss the TSE Index saw to itself to date once more went beyond 2%.

The spike in the stock exchange trades and steamed activity during the period was quite unprecedented. This was quite contrary to market practitioners” expectations, as the fundamental factors in the market, particularly commodities market either domestically or internationally were moderately improved, with oil prices and materials and iron ores prices gaining to some extent what they had lost in the years before. However, this did not continue for a long time as for instance oil prices bounced back and the recession in the global climate is set to return back with current conditions in the investment environment.

What is of note during the same period was the change occurred in the management of the Securities and Exchange Organization (SEO). This was believed as the major catalyst behind the surge in the transactions in the market, as some large institutional bodies in the market welcomed the introduction of the new CEO., Mr. Shapour Mohammadi, as a person with acceptable back ground and education in the capital market.

Next catalyst to the boom in the market in said period was the sponsorship of big fixed mutual funds of the share prices, as they believed there were shares in the market worth going long on them due to their prices touching the bottom levels.

In final analysis, all this, in turn, encouraged the individual investors to follow suit and enter their money into the market to help solve the puzzle of increase in the value and volume of trades in the stock market in the said time range.

TSE at a glance

 

 

 

 

 

 

 

 

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. 

To contact reporters: Inter@agah.com