In Iran's Fiscal 2019-20: Stocks Defy Forex and Gold

EghtesadOnline: A review of the performance of financial markets in the 2019-20 fiscal shows investment in the currency and gold market yielded the lowest returns, and the stock market delivered the highest profits.

News ID: ۷۴۹۹۱۵

27 April 2020

Investment in real estate yielded relatively moderate returns, according to a report published by Tehran Chamber of Commerce, Industries, Mines and Agriculture.

As per market data compiled by the chamber, dollar and euro rates increased 19.8% and 14.4%, respectively, during the yearlong period, which was way lower than the three-digit percentage growth in stock value.

The greenback was worth 129,000 rials in Tehran's open market during the mentioned period compared to an average 108,000 rials a year before.  One euro was bought for 144,000 rials. In the previous year it was valued at 126,000.

It merits mention that the price of major currencies jumped against the rial from the beginning of the new fiscal year (started March 20).

A USD currently now sells for 162,000 rials in the open market -- 25% higher compared with last year’s average. A euro is traded in the region of 170,000 rials.

In tandem with the local currency market and, to a lesser extent, the international market for the precious metal, gold yielded a little higher.

One benchmark Bahar Azadi gold coin was valued at 45 million rials ($278) on average in the previous fiscal, while it was worth 34 million rials in the preceding year, rising 33.9% annually. Each Emami gold coin cost 46 million rials, up 29.9% compared to the year before.

Boon Season

The TCCIM report shows that the stock market was a boon for investors more than any other market during the year as shown by the dramatic growth in value and volume of traded equities.

To simplify figures, TCCIM presented data based on the base figure of 100 points in fiscal 2016-17.

Accordingly, the value of traded equities on the stock market increased from 261.6 points to 868.8 last year to record a whopping 232% annual growth.

There was a steep hike in the volume of deals. The index for the number of shares traded on the stock market stood at 430 points in the period, indicating 112.7% growth compared the earlier year when the index was at 202.2 points.

Data show the housing market was the second best reward last year. One square meter of a housing unit in Tehran was sold for 133 million rials ($820) compared with 82.2 million rials a year before, or 62% higher year on year.

Market data reveal increasing traction of stocks over the past year as heavy regulatory intervention diminished the appeal of currency trade, which by extension impacted gold prices.

In addition, lower interest rates on bank deposits compared to chronic annual inflation and a prolonged recession in the real estate market encouraged investors to embrace the bourse.

The consumer price index (CPI) in urban areas reached 136.9 points last year, showing 34.8% growth compared to the same period last year. This meant that returns on investment in stocks and housing outpaced annual inflation.