Inflation set to rebound

Iran’s inflation will bounce back to 12-13% in the next fiscal year (starting March 21, 2017) due to the high monetary expansion rate, says economist Saeed Leylaz.

The government did not manage to bring down money supply growth rate below 30% per year, which is alarming, he noted.

“Until further notice, there is the danger of hitting double digit inflation next year,” Leylaz said.

Inflation dropped to 9.7% in recent months. It was the first time inflation fell below the 10% mark in 26 years.

Iran’s Foreign Minister Mohammad Javad Zarif said the country is ready to receive “letters of comfort” from the US Department of the Treasury to alleviate concerns of foreign banks that are still afraid of US penalties for working with Iran after coming into force of the JCPOA. “We will pressure the Americans to respect their commitments and release such a letter,” Mohammad Javad Zarif told reporters on Monday.

“[Foreign] banks and economic sectors will welcome the letter,” IRNA quoted him as saying after returning from a six-day tour of Latin America that took him to Ecuador, Cuba, Chile, Nicaragua, Bolivia and Venezuela.

Iran is struggling to access financing from abroad while most major foreign banks fear unwittingly violating vague, residual American sanctions, which prohibit trade with Iran in dollars, through the US financial system.

Iran has pressured the United States to do more to remove obstacles to the banking sector and has sought European leverage to secure better terms from the US.

“Exports of Iran’s industrial goods, excluding those of oil and gas condensate, witnessed a 21.1 percent hike in the first four months of the present Iranian calendar year (March 20- July 21, 2016),” Iranian Deputy Minister of Industry, Mining and Trade, Mohsen Salehinia, cited saying in a press conference on Monday.

Life insurance accounted for 14.8% of insurance industry’s earned premiums in the first quarter of the current Iranian year (started March 20, 2016), growing 2.9% YOY, compared with 12.6% of the same period, the preceding year, showing a 2.2 percentage points.

According to Central Insurance Company of Iran, acronymed as CII, in the spring season, insurers sold   7.7 trillion rials ($220 million, at unofficial exchange rate) premiums by issuing more than 776,000 life insurance policies.
The rise in life insurance class in insurers’ portfolio seems to be the result of consecutive cuts in banking sector’s interest rates kick started in the year before.

Is Tehran Stock Exchange Index truly representing the overall market behavior?

This is a common question asked multiple times by market practitioners and observers of Iran’s capital market. This is essentially due to the asymmetry readily witnessed by those who buy and sell stocks of companies listed on Tehran Stock Exchange (TSE).

Indeed, there are occasions when mixed signals are communicated by the All-Share Index if you happen to make professional investment decisions based on interpretations of the benchmark index.

For instance, you might see in one typical session of the exchange market that the gauge is in the red zone by about 300 or 400 points down but there are many sectors across different market boards that are experiencing gains rather than losses in price in spite of the general negative environment usually seen under such circumstances.