Capital Market Role Expands in Iran

EghtesaadOnline: A report by the Tehran Chamber of Commerce, Industries, Mines and Agriculture Economic Review Department shows the expanding role of the capital market in financing businesses.

News ID: ۷۸۵۰۴۲

23 November 2019

The report put the contribution of capital market in financing economic sectors at 813 trillion rials ($6.8 billion) during the first seven months of the current fiscal year (March 20-Oct 22).

According to the report released on the TCCIM website, the figure indicates almost two-fold growth (99.7%) compared to the corresponding period last year.

The share of finance by equity financing rose from 290 trillion rials last year to 428 trillion rials ($3.6 billion) by Oct. 22, according to Financial Tribune.

In addition, some 389 trillion rials ($3.2 billion) was procured from the debt market with debt financing rising from the previous 298 trillion rials last year.

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

Iran’s capital market has four branches, namely Tehran Stock Exchange, Iran Fara Bourse (over-the-counter market), Iran Energy Exchange and Iran Mercantile Exchange.

The number of initial public offering on TSE and the over-the-counter equity market IFB has grown three times in seven months on a year-on-year basis.

Since the beginning of the fiscal year, both markets have hosted more than 16 IPOs. The IPOs made 3.4% contribution to the funding.

During the one-month period to Nov 16, more than 107 billion shares worth 443 trillion rials were traded in 12.3 million deals in the TSE. There was a 12% decline in the number of deals.

The figures indicate a monthly decline of 31% and 13%, respectively, in volume and value of trade during the period.

By the end of the reviewed month, TSE’s main index TEDPIX stood at 306,400 points, registering a return of 69% compared to the beginning of the fiscal year. Return for the equal-weighted index was higher at 158%.

Mercantile Bourse

The value and volume of trade in the Iran Mercantile Exchange during the month to Nov. 16 rose 159.4% and 155.2%, respectively, compared to the same period last year.

Likewise, the average price of commodities traded in the market rose by 1.3%.  Investors traded 17,100 tons of goods worth 1.38 trillion rials in the commodity bourse while 6,700 tons of goods valued at 5.3 trillion rials were sold in the corresponding period last year.

From the beginning of the year to November 16, oil products worth 153 trillion rials were traded in the Iran Energy Exchange.

Trade in a variety of energy carriers at IRENEX generated foreign currency worth $846 million in eight months. Representing 31% of the total earnings, gasoline had largest share in this category.

Transactions were largely in diesel, gasoline, LNG, raffinate, heavy crude, solvent 402 (white spirit), solvent 503, heavy oil cut, heavy naphtha and electricity.