TEDPIX Ends Week Lower

Tehran Stock Exchange’s main index TEDPIX lost 389.50 points or 0.45% during the week that ended October 4 to end at 85,429.5.

The main index of the smaller over-the-counter exchange Iran Fara Bourse shed 9.9 points or 1% during the week to stand at 951.1.

Trading at Iran’s stock markets starts on Saturday and ends on Wednesday. In the last Iranian week, the markets were closed on Saturday and Sunday due to holidays.

Close to 1.96 billion shares valued at $162.3 million were traded on TSE during last week. The number of traded shares and trade value dropped by 63% and 56.6% respectively compared to the previous week.

TSE’s First Market Index shed 387 points or 0.65% to end at 59,119. The Second Market Index slid by 251 points or 0.13% to close at 190,165.9.

At IFB, more than 818 million securities valued at $341.2 million were traded. The number of traded shares dropped by 52% while trade value grew by 17% compared to the previous week.

IFB’s market cap lost $377.5 million or 1% to reach $28.4 billion.

Its First Market witnessed the trading of 57 million securities valued at $3.12 million, indicating a 31% and 56% downturn in number of shares traded and trade value respectively.

About 282 million securities valued at $17.92 million were traded in the Second Market, with the number of traded securities and trade value plummeting by 76% and 47% week-on-week respectively.

 Equity Market’s “Renaissance”

Rumors of “great reforms” were circulating in the capital market in early September with officials hinting at positive developments to come regarding frozen trading symbols on Tehran Stock Exchange and Iran Fara Bourse.

The official announcement finally came this week with the local media calling it the equity market’s “renaissance”.

For about five years, the market was struggling with a swath of frozen stocks due to the companies’ opaque financial or legal conditions, preventing investors from accessing their locked capital.

The new reforms by the Securities and Exchange Organization and the Economy Ministry are expected to put an end to the dilemma.

According to Economy Minister Masoud Karbasian, the new reforms have two major points.

First, “all stocks’ tickers will be opened in 60 to 90 minutes [after the SEO has received the required financial information], and in normal conditions, no symbols will remain frozen any longer than that,” the minister said in a Wednesday Cabinet meeting.

“Stocks will remain closed for a maximum of 20 days. After that period, the companies’ will be able to ask for a 10-day respite, and once passed, [the SEO] cannot continue freezing them for any longer.”

Currently, 25 and 47 firms’ shares are locked on TSE and IFB respectively, according to SEO data. Some of them, including Iran Zamin Bank, have been frozen for over two and a half years.

Karbasian noted that the whole process will also become more transparent for investors.

If a firm refuses to release the required information after 10 days of being barred from trade, the details of the process and SEO’s request for data will be publicized. After the 30-day period runs its course, the organization will reopen the shares and brokers are mandated to warn investors about the shares’ potential trading risks.

The new set of regulations is expected to go into effect in about two months. The exceptions to the new regulation, however, are firms with “legal” troubles, Karbasian added.

The minister did not name any firms, but the most prominent example that comes to mind is Electricity Meter Manufacturing Company (also known as SKI), which has a lawsuit to deal with and a CEO behind bars on fraud charges. SKI’s shares have been frozen for over a year now. SKI’s shareholders have staged two protests at TSE this year, once in July and again in September.

Shapour Mohammadi, the head of SEO, also elaborated on the regulations’ details in an interview with Securities and Exchange News Agency on the same day. He vowed that no more firms will be extensively barred from trading due to insufficient financial information. However, in a disheartening note to investors, Mohammadi added that the reforms will not affect the already closed shares.

The so-called renaissance promises bright horizons for the capital market, but SEO’s solution to the blizzard of already frozen stocks remains unknown.

 Go-Ahead for $2.56b ITB Issuance

The government was given the go-ahead to issue up to 100 trillion rials ($2.56 billion) of Islamic Treasury Bonds by the end of the current fiscal year (March 20, 2018) for financing spending prioritized by the Planning and Budget Organization.

The new directive was ratified by First Vice President Es’haq Jahangiri on Tuesday in a letter to the Ministry of Economic Affairs and Finance; Ministry of Cooperatives, Labor and Social Welfare, PBO and Vice Presidency for Legal Affairs.

According to the letter, the ITBs are tax-free and set to mature before the Iranian yearend using PBO’s assets.

Settling the bonds’ yields is also prior to any of the treasury’s payments for the year and the obligations cannot be transferred to debts issued in the next fiscal year.