Iranian Privatization Organization divested more than 21 trillion rials ($136.36 million) worth of government shares and assets through the stock market, negotiations and tenders during the seven months to October 22.
Accordingly, divestitures through Tehran Stock Exchange amounted to 18 billion rials ($116,883), while tenders and negotiations totaled 21.21 trillion rials ($137.73 million) and 135 billion rials ($876,623) respectively.
More than 53.18 trillion rials ($345.33 million) of capital increase was registered in Tehran Stock Exchange during the first seven months of the current fiscal (March 21-October 22), 23.9 trillion rials ($155.22 million) was through rights issue.
This is while analyses show capital increase through TSE amounted to 9.96 trillion rials ($64.72 million) during the first month of the year (March 21-April 20), 7.99 trillion rials ($51.93 million) pertained to rights issue, IBENA reported.
It is worthy of mention that in the last fiscal (ended March 20), more than 109.26 trillion rials ($709.5 million) of capital increase was registered through TSE, while rights issue had a share of 91.98 trillion rials ($597.28 million).
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Capital Market on Normal Course
The managing director of Imen Bourse Brokerage Co. says US sanctions have already affected Iran’s capital market and no added harm is expected in the coming weeks when the new unilateral restrictions come into effect on Nov.4.
Teymour Abouhamzeh said First Vice President Es'haq Jahangiri and other economic officials have made known that there will be no new impact regarding the US sanctions simply because the hostile White House under Donald Trump “has done all it could to undermine Iran’s economy.”
Speaking to the Securities and Exchange News Agency, he said sanctions and their impact have been predictable for the market in more ways than one, including the capital market. Abouhamzeh said “shareholders will invest in shares with potential” because that is where the market is headed.
He suggested that stakeholders will enter the capital market with full awareness and not invest only in one company or in one industry. “They will prefer to diversify their investment and share portfolio to reduce risks.”
Referring to the six-month report on companies’ performance, he said companies that little or no dependency on foreign currency have performed better.
“In some industries, such as petrochemicals, companies have reported profit in six months what they usually make in one year. Some have made twice or even 2.5 times higher profits. Such companies will attract the interest of investors and shareholders,” Abouhamzeh added.
He went on to say that sectors like the auto industry, which heavily depend on foreign currency, have been hit harder by the US sanctions because increase in forex rates has added to their cost prices. “Naturally they have not performed well enough and there has not been much interest in their shares compared to those of mineral, steel, petrochemical, and oil refining companies.”
In general, share prices have not been moving in line with the upsurge in forex rates and tanking of the national currency, he recalled.
Abouhamzeh was optimistic about the future of the markets and said indices will rise again after November 4, the time when new US sanctions are supposed to officially take effect. “The market will move on toward a positive course.”
In other news, Allahverdi Rajaei Salmasi, a senior capital market expert, told SENA the capital market has been lucrative since the beginning of the current fiscal (March 20) and the increase in currency rates has triggered a positive wave in the markets.
“We have been witnessing rise in the volume of trade in the capital market, which is due to the public concern about the decline in the value of the rial.”
Due to the expected rise in inflation, the capital market has been able to gained the people’s interest and increase in share prices is based on hype; this is while it should be based on real yields, Salmasi was quoted as saying.
Since the capital market welcomes even low amounts of capital, it has attracted people from different social strata, but other markets such as housing, forex, and coins need much high amounts of capital. Accordingly, people have entered the capital market and bourse with the intention of securing the value of their assets against galloping inflation and the steep decline in the rial.
