Reforming Iran’s Banking Sector High on Agenda
In his speech on defending to-be-elected ministers, President Rouhani re-stressed his administration intention to pursue reforms in the country’s banking sector, which is currently grappling with high rates of non-performing loans and credit crunch and promised to free banks from the burden of financing economic activities in the country. Referring to issues like the false growth in the housing market, spread of unregulated credit institutes and speculative activities along with insufficient oversight as causing sky-high interest rates and lower lending power, which have paralyzed economic enterprises, he stated that the government will consider sufficient budget for solving this problem; he, then, announced attempts and cooperation with the CBI to do credit rating on banks and institutions.
In line with the Majlis intensive sessions to discuss and qualify the credentials, backgrounds and plans of the proposed ministers for vote of confidence, the Head of Securities and Exchange Organization of Iran spoke for the proposed minister of Economy and Financial Affairs, stressing on his sufficient experience and deep knowledge of Iran’s economy. Mr. Mohamadi expressed hope that his election will significantly contribute to a more powerful part played by the capital market as well as adding to higher profitability in (export) listed companies.
In the Market
Since we have seen no specific changes at the country’s macroeconomic atmosphere, the market behavior has not changed, either; as has been said before, the market is still waiting for the start of the new cabinet, resulting in low value and volume of trades. It is worth mention here that the CEO of Iran Mercantile Exchange (IME) announced that individuals are now able to trade petrochemicals in this market.
The majority of symbols in the spare part mfg. area in the Automotive industry were highly demanded, including Iran Tractor Forging, Motorsazan Iran Tractor and Irka Part San’at. Tickers like Iran Khodro, Pars Khodro and Saipa Azin settled with slim gains. Having positively adjusted its estimates by 158%, Saipa ticker has been halted since May 21st; the reason behind this long period relates to the SEO demanding more information on the IRR 20,000 bn decline in sales, which is now under investigation. The company has predicted to make IRR 141 EPS for the FY ending 20 March 2018 with IRR 39,000 bn in capital. Until the company provides the required data, the ticker seems to remain halted.
With commodity prices rising in global markets, tickers in the Iron Ore space witnessed a more positive sentiment compared with those listed on the Metals space. Iran Manganese Mines, Bama, Iran Zinc Mines Development and Bafq Mines faced buy queues. The more we approached the end of the session, symbols in the Metals space gradually turned green, led by Esfahan Steel.
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