Capital Market Financing at $8.7b in Last Fiscal

EghtesadOnline: According to a report released by the Tehran Chamber of Commerce, Industries, Mines, and Agriculture, in the previous fiscal (March 2017-18), contribution of the capital market to the supply of finance reached 1,000 trillion rials ($8.7 billion).

News ID: ۷۴۶۵۶۰

27 January 2019

During the one year period, total value of the banking system's lending was six times above the amount financed by the capital market that hardly comes as a surprise given the key role of banks in the economy.

In the previous fiscal, the total value of Tehran Stock Exchange and Iran Fara Bourse (over-the-counter market for trading securities and other financial instruments) was 5,280 trillion rials ($45.5 billion) which is approximately 36% of the GDP.

According to the TCCIMA report, in the first half of the current fiscal (March – Sept. 2018) the value of TSE and IFB markets reached 8,280 trillion rials ($71.3 billion) --  equal to 49% of the GDP in the same period, Financial Tribune reported.

Total value of trading in all four markets, namely TSE, IFB, Iran Mercantile Exchange, and Iran Energy Exchange, in the first six months of the current fiscal approached 2,000 trillion rials ($18 billion) or 12% of GDP.

In terms of the value of the markets, by the end of the third quarter of the current fiscal to Dec.21, First Market and the Second Market in the TSE accounted for 46.7% and 25.9% of the total value of the capital market respectively.

In the IFB, the Second Market had a share of 11.2% and the Modern Financial Instruments Market had a share of 8.8% of the total value.

TSE’s First Market value reached 3,810 trillion rials ($32.8 billion) by the end of Iranian month of Azar (Dec.21), up 57% compared to the end of last fiscal. Also, during the same period, value of the TSE Second Market reached 2,110 trillion rials ($18 billion), indicating 50.3% growth compared to the previous fiscal.

Aggregate value of IFB-based markets, including Modern Financial Instrument, First Market, Second Market, and Base Market, was 2,230 trillion rials ($19.2 billion) in Azar, indicating an average 52.4% growth compared to the previous yearend.

Chemicals and Basic Metals

In terms of the contribution of industries to the TSE during the period under review, chemical stocks held the lion’s share and accounted for one quarter of the total market, improving 3% over the previous fiscal’s 22% growth.

This was followed by basic metals (15%) and other products (14%), indicating 1% rise and 3% decline compared with previous fiscal.

In IFB, the other products held 45% of the market, which was 1% higher than the figure in the previous yearend, followed by chemical products (20%) and basic metals (15%), registering 4% decline and 5% growth, respectively compared to the previous yearend.

Almost 28 billion shares were traded in 2,339 deals at the TSE, worth 111 trillion rials ($956 million) in Azar, registering  52.6% rise year-on-year in the number of deals, and  112.26% and 24.39 rise in value and volume, respectively.

Additionally, TSE on average traded 1,495 million shares in 123,000 deals on a daily basis on average worth 5 trillion rials ($50 million).

During the first nine months of the current fiscal, 373 billion shares worth 1,157 trillion rials ($9.9 billion) were traded in TSE. IFB hosted deals worth 685 trillion rials ($5.9 billion) via 107 billion shares during the same period.

Additionally, the total value of trade in Iran Mercantile Exchange and Iran Energy Exchange reached 1,430 trillion rials ($12.3 billion) and 96 trillion rials ($827 million), respectively.

Debt Market

In Azar, 32 million shares worth 31 trillion rials ($26 million) were traded in 2,210 deals in the debt market --  up 561.8% in value YOY.

In the same month, 19,759 shares worth 49 trillion rials ($422 million) were traded in 1.3 billion deals in the First Market and 8,158 shares worth 26 trillion rials ($224 million) were traded in 944.4 million deals in the Second Market, registering 78.5% and 40.8% growth in value, respectively.

Also, value of the derivative market witnessed a solid  YOY growth of 606.6% in Azar, in which 180,000 shares worth 170 billion rials were traded in 322 deals.

During the same period, 471 million shares worth 3650 billion rials were traded in 22.789 deals in the Exchanged Traded Funds (ETF) market, registering 182.9% growth in annual value.

According to TCCIMA, in general terms, during the period between Oct.23 to Dec.21, 2018, the TSE’s main index, TEDPIX, was indeed bearish.

The fall is attributed to diverse factors, namely re-imposition of US sanctions, rejection ofhe counter-terrorist financing bill (known as CFT) by the Guardian Council, decline in the gold coins and foreign exchange rate and 4% decline in global crude oil prices. Reports on the increase in global oil production, namely in Russia and USA, which hit unprecedented highs, also impacted the domestic stock market.