State owned Iranian banks to raise massive capital!
– On the 4th Iran-Europe Banking and Business Forum, one of the most high-profile events to address the challenges and opportunities facing Iran’s economic and financial sectors, second day, “Ali Divandori” the chair of Monetary and Banking Research Institute presented that state owned Iranian Banks are to raise near IRR 220,000 bn (USD 583.24 mn) in capital. This is while according to the budget reform bill of 2017, a figure of IRR 450,000 bn (USD 1,193 mn) is ratified for the whole banking sector capitalization which leaves more than 50% of the total funds to raise for the private banks.
Joala Sukuks to be soon on Tehran Stock Exchange!
– The need for new capitalization methods in the absence of proper banking channels made the Fiqh Committee of the SEO open to the idea of fresh Islamic securities to be introduced to Iranian capital market. The most recent development is the design process of Joala Sukuks based on cash streams (flows) of projects regardless of any ownership requirements in the said project.
The process of Joala Sukuks is: The government shall select a contractor to construct a predefined asset with specified costs. Then the administration shall enter a “Joala” contract with the third party (intermediary) appointing them to be the operator carrying out the capitalization, construction and in cases utilization of the project for a defined royalty. The intermediary will issue the “Joala” securities and start to raise capital for the project and later enter to a construction contract on behalf the security owners.
Refineries Down, Banks Up!
In the Market
Investors took some money off the table from refineries on today’s affair cashing in on a fresh banking sector which under performed till today. Following the news on capitalization figures of both state owned and private banks, a huge pile of investors’ funds flowed into the sector on a day that a handful of reasons buried the gold digging “Oil Products” into the grave. It seems that the market was ready for the “Bandar Abbas Oil Refinery” (PNBA1, +1.88%) block deal to finally happen to throw a bloodshed for other segment giants. Isfahan Oil Refinery (PNES1) was the victim with a loss of 1.5% on the closing and near 11 mn traded shares. Other giants like Tabriz (PNTB1, – 2.19%) and Shiraz (PRZZ1, -2.29%) also ended deep in red. Analysts believe that reaching to the technical resistance cap was another reason for the sector to perform well below the expectations.
Banking on the other hand surged to the most today with “Mellat Bank” (BMLT1, 3.52%) being the leader. The ticker left 12 mn orders in the buy queue alone. Almost all the other large to mid caps followed the trend as well blowing fresh breath to the industry. With good news on banks capitalization followed by the 4th Iran-Europe banking forum and the promises on “Saderat Bank” return to the market, it would be logical to assume that bankers are finally getting out of the shade and are ready to boost the market for a while now.
Finally for the metals, it is believed that a resurrection in global markets is not far fetched, therefore the sector might be back on track. A couple signs showed themselves today as for the case of “Khuzestan Steel” (FKHZ1, + 2.49%) and “Iran National Copper” (MSMI1, + 0.95%), yet more time is needed to see if the sector rally is for real or what.
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