Government Securities Analyzed in Iran Budget Bill (2019/20)!
– A member of the Iranian parliament announced details of government securities to be issued in the next fiscal year (2019/20 Iran Budget Bill) in order to finance national projects, settle the contractors’ outstanding liabilities and reimbursement of previously matured debt securities (interest and principal). According to the data, 15% of national development fund resources could be dedicated to water, power and rail transportation projects. In this regard, the parliament has granted issuance of Islamic securities valued at IRR 45 bn for state-owned entities, IRR 290,000 bn for the acquisition of capital assets and IRR 55 bn for municipalities. Moreover, the administration can issue IRR 130,000 bn in form of Islamic Treasury Bills with a maximum maturity of 3 years and IRR 100,000 with less than one-year maturity in order to settle contractors’ liabilities. Finally, a figure of IRR 50,000 bn has been dedicated to reimbursement of previously matured financial securities.
– China’s Kunlun Bank is to keep 11 Iranian industries on “no transaction” list due to US sanctions. After a temporary halt in bilateral correspondents, the Chinese bank is only willing to keep cooperation when it comes to not sanctioned goods and humanitarian essentials. Iran Auto, Pet-Chems, Energy and Marine shipping sectors along with some raw metals and shipping ports will be kept in no transaction list.
– On the first day of winter, the falling trend of FX rates along with prices of Bahar Azadi gold coins continued again. Being on the path of recovery after a massive depreciation, Iranian Rial is getting a good chunk of its lost value back. USD/IRR traded at 99,990 stamping IRR 1,100 decline while EUR/IRR showed more reflex and dropped IRR 1,600 rials to close at 114,600 level. Each Bahar Azadi coin priced at 33,900,000 as well (down from +50,000,000 just a few months back).
In the Market
Equities mostly fell on today’s session as uncertainty surrounding a host of issues, which included politics and trade, continued to provide a justification to reduce risk. Today’s decline pushed the benchmark index like TEDPIX (-0.98%) and IFEX (-0.61%) to new quarterly lows of 154,550.48 and 1,780 respectively.
TSE had climbed to session highs in early morning action amid some market-soothing rumours from industries like Banking (+2.31%) sector specifically on Mellat (BMLT, 4.50%) and Saderat (BSDR, +4.49%) banks’ FX translation rate which got more solid as a letter stating that the “matter is under consideration” came out. Analysts believed that it is time to let go of frustrating commodity base sectors and lean over mid-weighted sectors like banking, pharma or plastic and rubber.
TSE component Mapna Group (MAPN, +3.86) for its part, was the best-performing almost monopole stock in the Engineering (+3.78) sector after it released a strong earnings report.
Islamic treasuries remained resistant to selling pressure amid the equity sell-off. The average yield to maturity of ITBs dropped slightly. The below table has the details:
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