Economy, Business And Markets

IPOs Reign in Equity Market

IPOs Reign in Equity MarketIPOs Reign in Equity Market

The amount of capital raise within the first 7 months of the year (March 21-September 22) has reached last year’s total inflow of money, demonstrating that financial instruments including the Initial Public Offerings have dramatically contributed to the surge, FNA quoted Ali Sahraie, deputy chairman of the Tehran Stock Exchange as saying.

Addressing the recent hike in market liquidity, Sahraie declared that the capital market is going to take a new approach to regulating trade activities.

IPOs aim to provide liquidity for respective local suppliers, a move which has consistently increased the market’s liquidity, said Sahraie, adding that “the latest IPO at the stock exchange brought 600 billion rials for the major stakeholder.”

The TSE official went on to say that any changes to the trade regulation process will be made in conjunction with the market activists.

The latest Initial Public Offering was followed by an unprecedented change in the number of shareholders. The Cement Investment Development Company (CIDCO)’s IPO – ranked 315th among TSE second market’s listed companies – offered 400 million shares to more than 42,000 individual and institutional investors, FNA quoted Sahraie as saying.

Making remarks on the recent complaints about the IPOs, he underscored the role of IPOs in providing cash-flows for local industries, highlighting that the IPOs have been launched due to the current positive atmosphere in the equity market.

Addressing the criticisms about the Iranian Privatization Organization’s IPOs, Sahraie stressed that these offerings were conducted in full coordination with the Securities and Exchange Organization (SEO). Altogether, he said, the two recent IPOs didn’t cause any turbulence in the equity market.

 TEDPIX Posts Brief Gains

After ending two consecutive days in red, the TEDPIX managed to stay in green at Monday’s close, with the free floating index leading the gains.

The lucrative IPOs grabbed the attention of investors, who provided liquidity through selling off other shares or through the fresh inflow of money. As a result, some indices were down, failing to push the market’s benchmark into green.

The TSE had another seesaw session, as the early rally revised down, leading the TEDPIX to inch up 35.1 points or 0.05 to settle at 75,965.9.

According to the TSE’s website, the first market index rose 46.7 points or 0.08 percent to end at 56,188.8. The second market index slipped 66.5 points or 0.04 percent to 147,923.5. The free floating index climbed 190.1 points or 0.22 percent, contributing to the most, standing at 87,497.1. The industry index lost 67.5 points or 0.11 percent to 63,335.9, and the blue chip index was up 2.2 points or 0.06 percent to finish at 3,486.3.

The trading volume and value continued their downward trend, as they fell compared to the previous trading day. More than 907 million shares changed hands, valued at 2.68 trillion rials, reflecting the impact of IPOs and the shaky behavior of stock market investors.

Saderat Bank’s shares, which are always among the highest traded shares, topped Monday’s volume of trade among the listed companies at the TSE, while Khuzestan Steel Company took the second place, and Shahed Investment Company stood third.

Financial group succeeded to settle on top at the end of the fruitful trading day, with the Mellat Bank making the most positive contribution to the TSE’s gauge. Tejarat Bank and Pasargad Bank took the next spots, respectively.  

As market analysts indicated, investors contribute to the rise in market liquidity by pouring money in the IPOs, as the IPO earnings are guaranteed. This, however, may affect the recent uptrend in the TSE. In addition, there are other investors who await the imminent outcome of the nuclear talks between Iran and the P5+1, as any unprecedented political change may lead to dramatic changes in market sentiment.