Market News

– The new chair of CBI revealed a super interesting FX plan for Iran Economy just the other night. Attempting to give the chaotic FX and gold markets a relief, it seems that this time the administration and other heads of powers are thinking clearly and the news package will work. Details of this new plan are:

• Only the essential goods, pharmaceuticals and medical equipment will be dedicated USD/IRR at a subsidized rate of 42,000. These products shall be announced by the Ministry of industry and mining only and their prices will see no increase at least until the end of 1397 (December 2018).
• Other FX needs of the nation shall be addressed in the secondary market at a rate to be determined by supply/demand mechanism and CBI will no longer interfering with rates there (there will be no more tier2 and 3 goods). Importers and exporters can freely place their orders in the said market, through NIMA platform, and enjoy the benefit of non-imperatives trades. Petrochemical, metal, iron ore and oil products producers can sell their FX revenues on a free market rate from now on with no limits. CBI itself will be a participant in this market and use its FX resources to balance the market whenever needed.
• Exchange houses are to be back in the trading loop (with no limiting caps) from Tuesday on a regular basis and their trades will no longer be assumed as smuggling. Retail demand will be addressed by them and there will be no subsidized travel FX again.
• The inflow of currency and gold into the nation is now free and there will be no barriers considering the depth of this new FX secondary market.
• Commercial banks are granted now by the CBI to deposit the ordinary peoples’ foreign currencies in an FX account and pay them FX interest.

– Novin insurance Co. (a private Iranian insurance firm) is to offer its shares publicly on Iran Fara Bourse. With IRR 1,500 bn (USD 34 mn) in the capital, the company owns a 1.6% of the insurance market share. The initial offering size is set to be 5%, however, considering that the free float of the company is now hovering around 6%, there might be an increase in the offering lot. EN bank and Novin investment bank are the major shareholders with 19.9% and 17.8% respectively.

– According to CBI’s stats, the money supply volume in Iran Economy has reached IRR 15,820,750 (USD 358.58 bn) bn in a one-year period ended Jun-21-2018 showing a 20.4% rise. The money supply figure also raised 3.4% only during the first quarter of 1397 (2018/19).

Stocks ended today on a surprisingly higher note after the other night’s statement by the CBI’s chair. After all, a free market FX rate for major listed industry producers was in favour of investors’ sentiment which shows a prospectus future for the equity market. With injecting fresh money resources into both TSE and IFB, TEDPIX (+4.05%) hiked for more than 5,000 points and stood on 133,556.77 level. This was while IFEX (+3.62%) also jumped meteorically. The trading volume and value reached new record highs, stamping figures of 4.4 bn and IRR 19,395 bn (USD 440 mn) respectively.

Analysts believe that if the USD/IRR be priced around 75,000 area on the secondary market, stocks have a +20% journey ahead from this point on. However, should the free market FX rate discovers circa 60,000-65,000, it is safe to say that stocks were just in price today.

Today’s advances were mostly indebted to Metals (+6.69%) sector tickers where Khorasan Steel (FKAS, +36.32%) got back to the trading board after a one session halt. The ticker has only been traded for half 10 mn shares, yet the better than expected rise in closing price made the company stamp 487.31 green points on the index solely. Isfahan Mubaraka Steel (FOLD, +4.84%) were highly demanded again and despite some attempts to oversupply the share, it managed to end the day with +25 mn orders left in buy queue just minutes before the ending bell. Only small caps of the industry closed the day in the red.

The heavy-weighted Chemicals (+4.73%) sector was next in line in terms of good performance and its giants had a massive impact on the overall index. Persian Gulf Petrochemical (PKLJ, +5.0%) was highly demanded from the starting bell and closed the day with orders left in the buy queue. Its sister subsidiary, Pars Petrochemical (PARS, +5.0%) also performed astonishingly good and its price reached IRR 36,229 per share (from IRR 24,000 on its IPO date, a +50% return in a matter of only less than a month).

Finally and on the flip side, the unfortunate Auto (-0.37%) sector which is can be considered as the first “dead meat” in front of US sanctions, performed poorly on today’s session. Its blue whale, Iran Khodro (IKCO, -0.35%) continued its losing stirk for the third consecutive day while its orange rival, Saipa Co. (SIPA, -1.13%) did exactly the same and both tickers made a sad day for the sector. Analysts believed that the abandonment of big EU automakers in fear of US sanctions along with the industry’s poor fundamentals are the main catalysts behind the bearish long-term trend of the sector.