Market News

– According to Iran’s Statistics centre data, the monthly point to point inflation rate of the Iranian economy (Jun-Jul 2018) reached 13.8% and broke its single digit pattern of recent years. The inflation rate of Tir month (Jun-Jul 2018) also hiked to 4.4% which showed a meteoric rise contrary to other months. The average quarterly inflation rate now stands at 2.18% which projects a figure of 29.40% (now it is around 13.8%) for annual P to P at the end of the 1397 year (2018/19). The 48 months’ average rate will also stand at 18.20% (now hovers around 8.70%). Speaking from experience, especially in Iran Economy, the depreciation of national currency due to high inflation has always had the capital market growth coming.

– Over an 11-month period, more than IRR 50,000 bn (USD 1.14 bn) worth of government liabilities to different bodies of the economy has been cleared or settled with the administration’s claims due. In a performance report published by the Ministry of economic affairs, more than 72% of the government sources have been provided by tax administration, customs department, stock dividends and debt securities issuance. Moreover, the dependence on oil revenues reduced from 29% to 26% for the last Persian calendar year. The credit risk of the nation also reduced from 6 to 5 with caused a 10% discount on international finances.

– As the yields of parallel investment markets reached unreasonable levels, the Islamic Treasury Bills market followed the trend as well. YTMs of outstanding issues has now reached near 30%. The below table and chart demonstrate the details:

In the Market

Major political tensions helped to nudge the market a tick lower today, underpinned by a steepening of the yield curve. The TEDPIX lost -0.24% while the IFEX (-0.04%) could not hold to its early morning gains yet closed slightly beneath its flat line.

Most sectors finished today in negative territory but losses were modest for the most part. The Metals (-0.56%) industry hand in hands with Auto (-2.27%) sector made the red day more disappointing for the market. After worse than expected performance report by its orange giant, Saipa Co. (SIPA, -8.17%) ticker changed hands for almost 40 mn shares and stamped -77.53 negative points on the overall index. Other names of the sector reacted to this opening and closed with massive sale pressure.

Steelmakers, also, did perform poorly and ended the day almost all in red. After the abolition of pellet trades on IME, investors are pessimistic towards the sector. This is while the controversial FX pricing for exports is not helping the matter at all. Analysts believe that only a true fundamental catalyst the sector will move to its upward potential. Isfahan Mubaraka Steel (FOLD, -0.72%) finished yet another range-bound session today with 36 mn traded shares. Khuzestan Steel (FKHZ, -2.72%) did worse yet with lower trading volume hence less negative points on TEDPIX (-69.18).

In general, the stock market is restless these days with loads of bad news coming at it. Unless the administration shows its real support by addressing the bottlenecks and easing up the bureaucratic processes. Freeing the FX rate for Petrochemical and Steel exports is considered the first and most important of those actions the government shall take.

Source:

2018, Iran Economy future inflation analyzed by Agah Group!, Tuesday, July 24, p.1,<https://agahgroup.com>