Major Factors Affecting Inflation
– Having entered the one-digit area in the previous year for the first time, the recent statistics demonstrate that the point- to- point and average inflation rates are now on an ascending trend, estimated to go back to the two- digit zone in the current month. A recently conducted research has showed that among factors affecting this rate, the three factors of imported goods price index hike, a pause in liquidity growth and a decline in the GDP growth have played stronger roles. As a solution, the research has stressed on lowering dependence on foreign goods and increasing domestic product, which will be realized by adopting proper foreign exchange policies and improving domestic products quality. This calls for a stronger economic diplomacy with countries pioneer in world trade to benefit from lower prices, removing intermediary costs as well as reducing transportation costs. The next part is taking cautious steps to use proper monetary policies and prevent any instability in such policies. Then, concentrating on internal and domestic capacity for high quality production in the long term must be considered. This way, actual results of lower inflation rates will be tangibly felt and the country will also be put on a path towards economic growth.
– Based on statistics, the debt market has contributed more than 50% financing through the capital market during 2016/17 such that out of financing worth IRR 520 bn, more than IRR 290 bn have been materialized through the debt channel. However, critics usually stress on the strong role played by the government in this market leaving the private sector empty-handed of its benefits. It is so while the latest statistics in the TSE and IFB prove the rather equal shares of the governmental and non-governmental sectors in the debt market. Currently, debt bonds worth IRR 90,000 bn and IRR 200,000 bn have been issued in the TSE and IFB, respectively where the government fills a 55% of its share leaving the private sector with a 45% role; such rates are not that much different from statistics obtained from foreign debt markets. The point worth mentioning here, nevertheless, is that attracting investors’ trust in each market depends to a great extent on supports of organizations and entities as well as that country’s government, freeing them of concerns over the failure of such bonds, which seems to be enough for justifying the current role of the Iranian government.
In the Market
Despite the gradual positive movements in global commodity prices, not a sharp hike is expected. Domestically speaking, different sectors in the country all are waiting for the introduction of the new cabinet of President Rouhani to see if it will adopt more expansionary policies or not, although the recent approval on selling government bonds in the debt market might add to the current rather negative sentiment in the stock market.
Following the recent trend, the majority of companies in the Construction space witnessed positive trades, led by Sakht Ajand (0.15%) and Shahed Civil & Development (2.01%). technically speaking, tickers are at their support levels, ready to start a rise. The similar trend was also observed among symbols listed on the Cement space with Doroud Cement, Tehran Cement and Lar-e Sabzevar Cement closing with buy queues.
Despite the absence of its leaders, i.e. Saipa and Iran Khodro, a great number of tickers in the Automotive industry, especially those active in the spare part mfg. area went through positive trades. In the final hour, Iran Khodro ticker was reopened in the +0% zone at IRR 2,684. Niroumohareke ticker was reopened at IRR 1,796, 3% higher after holding its annual general meeting and dividing IRR 19 EPS per share. Mashhad Wheel Mfg. ticker also turned back to the market at IRR 860 going up 1 percent after its general annual meeting was held.
In line with not satisfactory global commodity prices, names in the Metals space mostly ended in the red with Iran Pipe & Machinery Mfg. and Zangan Zinc Industry losing more than 4%, although Shahid Bahonar Copper and Iran Ferrocilis finished with buy queues.
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