Measures to Move Iran’s Economy
* In its latest instruction regarding the interest rates on deposits and aimed at supporting production and employment as well as putting an end to the unconstructive competition among banks to attract funds, the CBI urged all banks and credit institutions to set 15% and 10% as the annual interest rate and short term rate, respectively, starting from September 2nd; the certain rate will be calculated at the end of the fiscal year. In addition, the interbank rate climbed down from 21% to 18%. Furthermore, contracts struck with previously set rates will not be renewed at old rates at all. According to this instruction, fixed income funds will also have to pay 15% return. Some experts believe that the guaranteed implementation of this matter will call for the full support and active intervention of the CBI in the interbank market along with the lowering of its fine rate of 34% to become in line with that of the interbank market.
* The first meeting of the Money and Credit Council was also held the other day with new ministers of Economy and Financial Affairs and Industry, Mine and Trade present. At the end of the meeting, the amendment regarding the bank account (in IRR) opening instruction for foreign individuals was approved and the measures taken by the CBI within the past months, including confronting illegal/unsupervised activities/enterprises in the money market as well as attempts to pave grounds for the implementation of the set interest rates were reported.
* In addition, today, Mr. Karbasian, the newly elected Minister of Economy and Financial Affairs sat with Mr. Mohamadi, the Head of Securities & Exchange Organization of Iran, discussing steps to promote the capital market as well as becoming informed about the latest status and instruments in the market.
* The World Bank has agreed to supply Shomal Railway Company with finance equal to 1 bn euro to electrify the railway; this will be the second electrification project financed by foreign parties.
In the Market
Intensified with the implementation of interest rate lowering, which has the potential to direct some funds to the market as well as providing institutions with less expensive facilities and lower interest expenses, the gradual and crawling rise in dollar price picture a brighter image for the capital market; to these, the uptrend in global commodity prices, specifically in zinc and copper must also be added. The entrance of fresh money into the market, however, requires some time perhaps when more trust is built in the actual and serious supervision on how banks will implement the interest rate lowering plan.
The majority of names in the Metals group ended the week on a high note with Middle East Mining Industries and Iran Aluminum as the top gainers (+4%). Nearly the whole Iron Ore space also ended above their flat line with Iran Manganese finishing with a buy queue.
The positive 16% adjustment in Bandar Abbas Oil Refining estimates drove most names in the Oil Products space into the green territory. 200 mn shares of Esfahan Oil Refining were also block traded in the retail market at IRR 3,032, 4.99% above its flat line.
Similar sentiment was seen in the Chemicals industry with Tuka Paint Sepahan (+4%), Zagros Petrochemical (+2.5%) and Iran Carbon (+2.5%) outperforming. 8.5 mn and 2 mn shares of Khorasan Petrochemical and Zagros Petrochemical were also block traded in the retail market, respectively.
Mobin One Kish Company in the IT & Communication sector has still kept its buy queue, benefiting its shareholders with 60% return since its IPO, while Atie Data Processing shed more than 4%.
Finally, among names in the Automotive industry, Niroumohareke and Motorsazan Iran Tractor closed with buy queues, followed by Iran Lent going up more than 3%; the remained tickers were traded in a balanced trend.
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