Iran's Capital Market Playing Bigger Role in Financing Businesses

EghtesadOnline: A report by the Economic Research Department of Tehran Chamber of Commerce, Industries, Mines and Agriculture indicates growing contribution of the capital market to financing companies.

News ID: ۷۴۸۳۱۵

31 August 2019

The percentage of capital market contribution to financing businesses increased from 5.1% at the end of the fourth month in the last fiscal year (July 22, 2018) to 12.7% by the end of the same period this year, the report, published on the TCCIM website, showed.

Funds procured from the capital market reached 309 trillion rials ($2.7 billion) by the end of the fourth calendar month in the current fiscal year, up 255% compared to the first four months of previous year when the amount was 87 trillion rials ($783 million).

The share of finance by equity financing rose from 28 trillion rials to 153 trillion rials ($1.3 billion) during the period, Financial Tribune reported.

Likewise, the share of debt financing reached 156 trillion rials ($1.4 billion) from the previously 59 trillion rials reported for last year.

Equity financing is the method of raising capital by selling company stock to investors while debt financing occurs when a firm raises money for working capital by selling debt instruments to individuals and institutional investors.

The chamber data shows trade in the capital market was dominated largely by legal entities by the end of the fourth month in the previous year as they contributed to 52% of trade.

However, they were replaced by natural entities by the end of first four months in the current year when the latter conducted 60% of trade.

Higher Value and Volume

During the month to August 10, some 53.3 billion shares worth 200 trillion rials ($1.8 billion) changed hands in 6.57 million deals in the Tehran Stock Exchange.

The figures indicate 89% and 48% rise, respectively, in value and volume of TSE trade in the period compared to the same period last year.

The report covering the present calendar month to August 11, indicates 13% rise in value and 41% decline in volume of trade conducted in the Iran Mercantile Exchange compared to same period last year.

Investors traded 1.3 million tons of goods worth 71 trillion rials ($640 million) in the mercantile bourse during the reviewed month while 2.2 million tons of goods valued at 130 trillion rials were traded in the market in the corresponding period last year.

Data on the performance of industries in IME showed that while metals trade saw a 25% decline in volume, it grew 23% in value during the month to August 11 compared to the same period a year ago.

Metals weighing 599,000 tons worth 32 trillion rials were traded during the reviewed month in the IME.

The market hosted the trade of 678,000 tons of petrochemicals and oil products worth 39 trillion rials during the period -- up 22% in value and down 41% in volume compared to the similar period last year.

During this period, 269,000 tons of commodities worth 12 trillion rials were traded in the Iran Energy Exchange, indicating an annual rise of 85% and 15% rise in value and volume, respectively.

A report by the Statistics and Risk Analysis Department of the Securities and Exchange Organization covering the months to June 21, said market capitalization of Iran’s four bourses (Tehran Stock Exchange, Iran Fara Bourse, Iran Mercantile Exchange and Iran Energy Exchange) reached 12,282 trillion rials ($110.3 billion).

The numbers spoke of 106.5% rise compared to the corresponding period in the last calendar year.