– The unofficial news tells about that the currency policymaker might add another rate to Iranian FX rates regime. From today’s morning, the order submission for the third group of products (cell phones, Automobiles, Home appliances, Cosmetics, etc.) has been halted which heralds a change in NIMA platform rates. Speculations suggest that there might be three rates for USD/IRR in the market:
– Fixed income funds are finally having a change of heart. According to new stats released by Donya-e-Eqtesad news agency, the composition of Iranian fixed income funds investment portfolio has gone through important and noticeable changes since Feb 2017 until Mar 2018. It is now a fact that the weight of bank deposits and cash portion reduced by circa 8%. Accordingly, a rise in equity share is obvious yet the freed money split its way between debt securities and stocks. The below table demonstrates the details:
– Aiming at expanding its Euro-based interactions, the head of the Securities and Exchange Organization of Iran announced the consideration of launching Euro dealt Kish International Iran Stock Exchange within the next 2 months in the exchange High Council; this market is to host foreign companies, mostly from countries with less cooperation with the US, including adjacent neighbors and European trade partners as well as domestic players.
– Iranian Islamic T-Bills have shown a strange behaviour since our last update. After a solid ascending trend just a week ago, the curve for longer maturities is now on a descending path. The below image demonstrates the details of outstanding T-Bills issues on Iran debt market.
– Stats show that the yield curve’s first derivative has turned positive on longer maturities of Islamic Treasury Bills which only could be translated into higher expectations on the risk-free rate for following months. Although, unless the situation stabilized in this status for some more days, the data shall be considered as inconsistent, however, analysts believe that the political uncertainties are only to blame for the raising risk-free yields on Iran debt market. The below images demonstrate the details.
– Despite significant upgrades in international standards pertaining to banks’ capital adequacy, the Central Bank of Iranian Banking sector still follows Basel I standards, which obliges banks and credit institutes to maintain this rate at 8%; however, the low capital adequacy rate (5%) along with high level of claims due have caused a crisis for banks, most specifically state-owned ones; to tackle this challenge, banks need to either raise their capital or adjust their assets; but, the current credit crunch which the administration is struggling with calls for severe and strict rules and supervision by those in charge for Iran’s banking sector to get through this path safe and sound. In line with reforms in the banking sectors, banks are obliged to implement Basel III standards until the end of 2018 to pave grounds for cooperating with their foreign counterparts.
– According to a report on Iranian mutual funds performance, the total asset under management of said funds (AUM) reached more than IRR 1,530,000 bn (USD 36.43 bn) pooled from near 2,300,000 investors. Exempting from tax on a round trip (issuance and redemption) along with giving investors the power to exit anytime with lowest possible cost are among the factors made mutual investment rather popular among people. The below table demonstrate best performing funds of Apr/May 2018.
– Following the maximum disclosure policies on Iran Banking industry, the process of transforming granted facilities to bad debts has been accelerated over the recent months. According to the stats released by a senate committee, during the years from 2006 until September 2017, the volume of non-current claims has reached a record high (seven times bigger), which made the NPL/Facilities ratio to hover around a two-digit zone. A massive portion of these bad debts was in the range of IRR 100 – 1000 bn (USD 2.5 – 24 mn). Moreover, the size of doubtful debts from non-current claims reached more than IRR 600,000 bn (USD 14.82 bn) in the year 2016, which can be categorized as NPLs anytime soon.