Money Market Alarm to go off!
Stats shows over the recent months liquidity components has been changed. Term deposits growth rate stood on a two year low in May/Jun 2016, 1.2%, while demand deposits jumped 10% over the same period. This was not just for the spring. Studies reveals since the fall last year, “money/liquidity” ratio grew over “near money/liquidity”. Most likely imperative rates cuts in short intervals is there only to blame. Analysts believe, due to the fact that banks resources might turn to other markets and cause price pressure, this conversion will bring inflationary effects in either long or short terms. Needless to say that a deceleration in term deposits growth rate would make banks weaker on lending.
History recalls that the lawmakers are focused on utilizing credit policies to overcome recession and yes, it would work in a healthy banking sector climate. Considering Iran’s case, not only the policy is going to help, but also causing irreparable damages is not far-fetched.
Money market reform side by side the negative and positive polices seems the only way to get out alive form the current situation. Not to mention debt market development will solve the credit bottleneck banks are struggling with now. In the end all will lead to pass the impasses safe and sound.
In the Market
The stock market continued the week on a lower note as the inconclusive readings of the market future left investors up in the air. TEDPIX finished today’s affair with 237.61 negative points and stood on 76,509.40 (-0.31%). It seemed participants walked back the knee-jerk reaction throughout the session, and almost all were pressing sell on their stations.
The Auto giants settled off their best levels in contrary to earlier week, testing technical support near the today’s price level. “Saipa” and “Zamyad” ended in the green both while “IKCO” lost 0.74% on the closing. More than 55 mn shares of Saipa changed hand and the ticker closed at IRR 1,099 (+2.16%). Conversely, IKCO finished with the slim loss and stood of IRR 2,935.
The oil-sensitive chemical and oil products sectors ended before the benchmark, extending previous loses even more. After Bandar Abbas Oil Refinery worse than expected financials, the share lost near 4% on the closing. Analysts believes that the pure sell pressure was only due to company inability to cover 3M expected EPS. Tehran and Isfahan Oil refineries also followed the trend with even more force. Shiraz refinery was the sole ticker tried to compensate for the industry, but the low volume made the good faith to an impossible mission.
The highly strategic Pharma sector was full of surprises. After days of sitting on the crown, finally regulator decided to move the limit higher and let Razak Laboratories to stamp +15.49% on the closing. Almost all the other bolds track the trend, left behind huge purchase orders the queue.
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