Market News

– For many years Iran had, and still have, the worst type of Energy Subsidies payments in the world which has only resulted in a weak and unbalanced economy for the nation (Iran Economy). The FOB price of petroleum hovers around 40 cents in the region and considering the domestic price of gas (IRR 10,000 – 10.52 cents!) it is clear that the Iranian government pays between IRR 790,000-890,000 bn (cUSD 8.5 bn) while this figure for less fortunate subsidies is just a bit more than half. The below picture shows the details of energy subsidies with respect to different economic deciles:

Source: Santa Economic Analyses

– After the successful launch of futures contracts on selected indices, now the secretary of SEO’s fiq committee announced that the principal and conditional consent of this body has been granted for warrant contracts on equities indexes. As of today, there are 7 different future contracts with expiration dates in Feb-Mar 2019 on TSE and IFB. All these derivatives eventually lead the market to be two-sided and deeper with hedging potentials.

– CBI stats show that the slope of monetary base growth has now steeper contrary to the same period last year. According to data, the monetary base of Iran Economy reached the surprising figure of IRR 2,360,500 bn (USD 24.85 bn – USD/IRR 95,000) for Sep-Oct 2018 that shows 20.40 per cent growth. This makes the money multiplier to sit at 7.16 which is the highest in about 7 years. The below table has the details:

In the Market

Equities fell for the fourth consecutive session today as global energy prices, especially crude prices, showed relative weakness. TEDPIX (-0.38%) lost +600 points to lose the important technical support level of 160K and settled at 159,146.43. This is while IFEX (-0.06%) closed the day almost near its other day’s flatline.

Agah analysis of the retail side investors shows that the trend of cash withdrawal from the market has not accelerated yet kept its negative trend steady.

Despite the concerns around lower than expected exports of Iron Ore, last day’s stats of Iran Customs department have that a massive iron ore shipment has been exported, however, even this news did not help the heavy-weighted Metals (-0.05%) tickers who will benefit from easier exports like Khuzestan Steel Co. (FKHZ, +1.18%) and Kaveh Steel (KVEH, -0.32%) to boom.

Source:

2018, Energy Subsidies paralyses Iran Economy!, Tuesday, Dec 18  p.1,<https://agahgroup.com>