The Central Bank of Iran’s recent decision to issue certificates of deposit at 20% rates blocked the foreign exchange market’s rally and simultaneously sapped stocks’ uptrend on the back of a weaker currency and introduced a more attractive investment option compared to stocks.
The rising yields in the debt market also mean reduced attraction for stocks. The last two batches of Islamic Treasury Bills issued on Iran Fara Bourse had their yield to maturity reach about 20% to compete with the no-risk high-return certificates of deposit.
Government Spokesman Mohammad Baqer Nobakht announced on Wednesday that government bonds with 20.5% YTMs will be issued as of Saturday, as the CBI’s two-week deadline for issuing CDs will come to an end, according to Financial Tribune.
Add US President Donald Trump’s hardline rhetoric against the 2015 Iran nuclear deal to the mix and investors’ risk-aversion simply makes sense.
TSE’s main index TEDPIX shed 196 points or 0.2% during the week that ended on February 28 to close at 97,961.8.
The smaller over-the-counter exchange market Iran Fara Bourse’s benchmark index IFX gave up 4.8 points or 0.4% during the week to stand at 1,092.2.
Weekly Trade in Detail
Over 4.97 billion shares valued at $391.6 million were traded on TSE during last week. The number of traded shares dropped by 18% while trade value grew by 26% compared to the week before last.
Trading at Iran’s stock markets starts on Saturday and ends on Wednesday.
TSE’s First Market Index shed 219 points or 0.3% to end at 69,572. The Second Market Index inched up by 4 points or 0.002% to close at 208,678.4.
And at IFB, over 1.37 billion securities valued at $184.57 million were traded, with the number of traded shares and trade value dropping by 2% and 31% compared to the previous week.
IFB’s market cap also gained $324.4 million or 1.1% to reach $30.91 billion.
Its First Market witnessed the trading of 150 million securities valued at $6.44 million, indicating an 8% and 14% drop in the number of traded securities and trade value respectively.
About 384 million securities valued at $21.3 million were traded in the Second Market, with the number of traded securities and trade value dropping by 32% and 15% respectively week-on-week.
Over 6 million debt securities valued at $118.55 million were also traded at IFB, dropping 40% and 38% in the number of bonds traded and their value respectively.
Exchange-traded funds also dropped 39% in trade number and 35% in value to reach 60 million worth $14.28 million.
Housing mortgage rights’ trade was up, as it reached 40,000 securities worth $6.4 million, marking a surge of 35% and 28% respectively.
Markets Dip, Save for Gold
A comparison of markets parallel to the equities in Iran, namely gold and forex, over the past week shows only Bahar Azadi gold coin posted growth.
The gold coin was followed by the US dollar, TEDPIX, IFX and euro in gains.
Gold’s rise slightly shifted markets’ gains so far this fiscal year (March 21, 2017-18). Euro did not budge and stayed on top, followed by Bahar Azadi gold coin, TEDPIX, IFX and USD.
The rial was quoted at 54,490 against euro by Thursday’s close, according to Tehran Gold and Jewelry Union’s data. It marked a 1.33% drop for the European currency.
Euro’s gains so far this year reached 32.51%, having started the year at 41,120.
TSE posted a 27% gain so far this year, while the figure stood at 24.8% for IFB.
The US dollar lost 0.17% against the rial last week to 44,700. The dollar’s gain so far this year reached 19.26%, having started the year at 37,480.
As for gold, Bahar Azadi gold coin gained 2.98% last week to 15.2 million rials. Its gain so far this year stood at 29.8%.