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April & May 2020 - Volume 14, No 159
Summary
Equity Markets
The TEDPIX index and junior Farabourse (IFB) market
continue to expand 74% and 57% in IRR terms over the past
two months ending April 2020, respectively. Based on the
unofficial exchange rate, the month-on-month gain in dollar
terms accelerate by 61% in TSE and 46% in Farabourse
market. This was mainly due to 8% depreciation of IRR
exchange rate over the month.
Debt Markets
For the start of the Iranian calendar year 1399 (March 2020) to
end April, total issuance on the fixed income market reached
0.2 billion US$ based on the unofficial exchange rate. Yield
to maturity (YTM) remained stable at 16% at the end of April.
Economic Review
This issue reviews the updates on housing market and the
recent inflation targeting announcement published by the CBI. In
addition, we have included a separate report covering the latest
macroeconomic data published by relevant organizations and
senior macroeconomic strategists in a fact-sheet summary, as
well as an economic calendar released by local and international
statistics centres.
North of Iran
Photo: Kourosh Odouli
1 Iran Investment Monthly
Table of Contents 3 Market Overview
3 Market Update
6 Performance & Updates
8 Historic Trends & Sector Insight
9 Industry at a Glance
10 Market Snapshot
12 TSE & Junior Market Performance
14 Top Ranked Companies
16 Iran’s Fixed Income Market
19 Economic Review
19 Latest Updates
21 Macroeconomic Data
22 News & Views
22 Recent Brokerage Reports
22 Turquoise News
2 Iran Investment MonthlyMarket Overview
April & May 2020 - Volume 14, No 159
Market Update
The Tehran stock exchange (TSE) markedly continued its recent upward
trend and grew by 66% in Euro terms in April 2020. Furthermore, the
market’s average P/E ratio exceeded 18.2 by the end of month, which is
around 183% higher than its historic average. Due to the prevalence of
negative sentiment towards parallel investment classes, the stock market
was swamped with a continuous inflow of fresh liquidity predominately by
retail investors over the course of the past few months.
Meanwhile, stock prices showed continuous growth leaving no room
for the expected and appropriate price corrections. Another important
factor was the debate surrounding the increase in bank’s interest rates
on deposits in late April. This eliminated the possibility of higher free
Shervin Shahriari
risk rates and encouraged investors to inject new monies into the stock Chief Investment Officer
market. A council of Banks announced that the one-year interest rate or
deposits would be 15%, substantially lower than the range of 18% to 20%
prior to the announcement
The market also experienced unprecedented daily trade volumes,
averaging at USD 441 million per day during April. Buyers were
particularly enthusiastic about shares of some of the larger companies.
The increase of 492 % in trade volumes compared to the same period
last year is indicative of investor interest towards the stock market.
Monthly TSE Volumes
8.8
Average : 3.1 Billion USD
Source: TSE
3 Iran Investment MonthlyMarket Overview
April & May 2020 - Volume 14, No 159
Among the main contributors to this increase are individual investors,
who carried out more than 80% of purchases in the market. In addition,
70% of the number of trades carried out online, indicating the increased
presence of individual buyers in the market. This positive atmosphere
and increased trade volumes have resulted in large price movements.
A clear example of this trend was in trading of smaller companies such
as tile makers, automotive and rubber manufacturers. Given the influx
of individual investors and the reluctance of larger shareholders to sell,
the stocks of these companies experienced a 5-10x increase in value
over the past year without any clear fundamental justification. To keep
up with the increasing demand, major shareholders started to offer their
shares heavily at market value, yet, they did not succeed to respond to
the buyers’ demand.
To temporarily balance against the share price increases and the
heavy influx of liquidity, the stock exchange officials have been trying to
encourage the government and semi-governmental entities to increase
their offerings of shares to the market.
Historic P/E 2007 – 2020
20 April-20
18.2
18
16
14
12
10
8
6
4
2
P/E
0
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20
Source: TSE
The average P/E of the market reached the vicinity of 18.2 by the end
of April. We have not experienced such valuation in the history of the
TSE.
4 Iran Investment MonthlyMarket Overview
April & May 2020 - Volume 14, No 159
The last highest average P/E was observed in 2004, which reached
a high of 10.8x when the economy was robust with the growth rate
of around 6% and inflation below 15%, none of them exist now. In
our view, there is the risk to the downside for the P/Es to fall towards
their previous means, if the current increase in share prices does not
translate into profit for companies. With the banks’ annual deposit
interest of 15%, the 9.5 percentage point gap between yields and
the average cash returns of the market must be compensated for
through increasing future profits.
YTM vs. Bank Deposit Rate
April-20
16.2%
April-20
15%
Source: CBI, IFB
With the Warren Buffet ratio of market cap to GDP around 161%, we
think we are overdue for a correction and will probably get a severe
one in the months to come.
5 Iran Investment MonthlyMarket Overview
April & May 2020 - Volume 14, No 159
Performance & Updates
11 - Year Average (2008-2020)1
Market Capitalization (billion US$) 2 113 TSE & Farabourse Junior Market
P/E 7.0 x TSE
Dividend Yield (%) 11 % TSE
Market Cap / GDP 39 % TSE & Farabourse
Dividend Growth Rate 22 % TSE
Total Turnover (billion US$), Average Annual 15 TSE
TSE Overall Index Average Annual Growth (US$) 20 % TSE
1
Annual data from 2008 to March 2020
2
Calculated based on unofficial IRR per US$ exchange rates.
Summary - March 2020
Market Capitalization (billion US$) 165 TSE & Farabourse Junior Market
Free Float 22% TSE & Farabourse Junior Market
Number of Listed Companies1 629 TSE & Farabourse Junior Market
TSE Index Performance (US$) 2,4
-4.4% (MTD) 13.8% (YTD) TSE
Total Turnover (million US$) 2
6,688 TSE & Farabourse Junior Market
Dividend Yield (%) 3
7.1% TSE
P/E 10.9 x
1
172 companies are listed in Over-The-Counter (OTC) or off-exchange market named as “Base Market” in Farabourse junior market which trading of these companies are done directly between two parties. 2 Calculated
based on unofficial IRR per US$ exchange rates. 3 Calculated based on the latest market data 4 TEDPIX Tehran Exchange Dividend Price Index (Dividend & Price Index)
Tehran Stock Exchange & Junior Market Trade by Value1 - March 2020
Iran Farabourse (Junior Market) Trade Volume (million US$)
Since the beginning 2020, the market has expanded to the
Tehran Stock Exchange (Main Market)Trade Volume (million US$) upside recording the YTD performance of the TSE and IFB
to 42% in IRR terms respectively. The gain in hard currency
terms was 14% on the TSE and the IFB on a year to date
basis. In March 2020, the TSE equity trade value expanded
to 5,293 million US$ from the 3,024 million US$ historic
12-month average. The total number of shares traded on the
TSE expanded by 19% compared to the one-year historic
average of 94 billion shares.
Million US$
Source: Tehran Stock Exchange
Iran Farabourse Company
All figures in US$ are converted from IRR at the free market rate
1
Trading volume month on month in US$ term - TSE includes mainly equity while Farabourse has more fixed income instruments and smaller equities.
6 Iran Investment MonthlyMarket Overview
April & May 2020 - Volume 14, No 159
Performance & Updates
11 - Year Average (2008-2020)1
Market Capitalization (billion US$) 2 120 TSE & Farabourse Junior Market
P/E 7.8 x TSE
Dividend Yield (%) 11 % TSE
Market Cap / GDP 44 % TSE & Farabourse
Dividend Growth Rate 22 % TSE
Total Turnover (billion US$), Average Annual 15 TSE
TSE Overall Index Average Annual Growth (US$) 34 % TSE
1
Annual data from 2008 to April 2020
2
Calculated based on unofficial IRR per US$ exchange rates.
Summary - April 2020
Market Capitalization (billion US$) 267 TSE & Farabourse Junior Market
Free Float 22% TSE & Farabourse Junior Market
Number of Listed Companies1 632 TSE & Farabourse Junior Market
TSE Index Performance (US$) 2,4
68.6% (MTD) 91.9% (YTD) TSE
Total Turnover (million US$) 2
11,859 TSE & Farabourse Junior Market
Dividend Yield (%) 3
4.4% TSE
P/E 18.2 x
1
173 companies are listed in Over-The-Counter (OTC) or off-exchange market named as “Base Market” in Farabourse junior market which trading of these companies are done directly between two parties. 2 Calculated
based on unofficial IRR per US$ exchange rates. 3 Calculated based on the latest market data 4 TEDPIX Tehran Exchange Dividend Price Index (Dividend & Price Index)
Tehran Stock Exchange & Junior Market Trade by Value1 - April 2020
Iran Farabourse (Junior Market) Trade Volume (million US$)
Tehran Stock Exchange (Main Market)Trade Volume (million US$)
Since the beginning 2020, the market has expanded to the upside recording the YTD performance of the
TSE and IFB to 134% and 108% in IRR terms respectively. The gain in hard currency terms is 92% on the
TSE and 71% on the IFB on a year to date basis. In April 2020, the TSE equity trade value expanded to
8,827 million US$ from the 3,664 million US$ historic 12-month average. The total number of shares traded
on the TSE expanded by 37% compared to the one-year historic average of 101 billion shares.
Million US$
Source: Tehran Stock Exchange
Iran Farabourse Company
All figures in US$ are converted from IRR at the free market rate
1
Trading volume month on month in US$ term - TSE includes mainly equity while Farabourse has more fixed income instruments and smaller equities.
7 Iran Investment MonthlyMarket Overview
April & May 2020 - Volume 14, No 159
Historic Trends & Sector Insight
Long-Term Overall Index (Normalized in USD) Long-Term Iranian Market Cap ( Normalized in USD)
Historic Average: 165
Historic Average: 159
April 2020 : 340
April 2020: 489
TSE Best Performing Sectors & Overall Index (Normalized in USD)
Diversified Industrial (Holdings)
Post & Telecommunication 200
Monetary Intermediation - Banks
Overall USD 182
176
163
TSE Large Sectors (% Market Capitalization)
22% 14% 9% 8% 7% 5% 5% 4% 26%
Mining
Chemicals
Diversified
Metals*
Other
Petroleum
Banks
Pharma
Telecom
Source: TSE, Bonbast, as of April 2020
*Metals sector includes steel, copper and aluminum
8 Iran Investment MonthlyMarket Overview
April & May 2020 - Volume 14, No 159
Industry at a Glance - April 2020
YTD Return 1-Year Return 5-Year Return
Top Performing Companies Market Cap
Sector Trailing (%) Trailing (%) Trailing (%)
in February 2020 (MOM %) (Million USD)
in USD in USD in USD
Sadid Industrial Group 871 533% 50% -77%
Metals*
MIDCO 3,008 92% 153% -42%
Yuka Foolad Holding 273 125% 515% -
Iran Zinc Mines Development 413 218% 426% 270%
Mining Sadr Tamin Investment Co. 1,465 162% 364% -
Chadormalu Mining and Industrial Company 4,976 25% 138% -22%
Behran Oil 928 89% 186% -13%
Petroleum Sepahan Oil Company 757 56% -46% -56%
Oil Industry Investment Company 137 48% 194% 7%
Padideh Shimi Gharn* 361 - - -
Chemical Shahid Tondgooyan Petrochemical Company* 1,598 - - -
Persian Gulf Petrochemical Industries Co. 12,724 50% 188% -69%
Saman Bank 668 -71% -35% -33%
Banks Parsian Bank 1,861 -37% 7% -24%
Pasargad Bank 2,663 214% 443% 378%
* Recent IPO
TSE Large Sectors 5-Year Performance (Normalized in USD)
Metals
Mining 309, April 2020
Petroleum
Chemical
Banks 251, April 2020
210, April 2020
157, April 2020
135, April 2020
Source: TSE, Bonbast, as of ending Apr 2020
*Metals sector includes steel, copper and aluminum
9 Iran Investment MonthlyMarket Overview
April & May 2020 - Volume 14, No 159
Market Snapshot -March 2020 Iran & Regional Markets
Iran: A 25-Year Snapshot, Asset Class Annualized Return in US$ (%) P/E Multiple Comparison
10% MSCI Morocco 16.9
Kuwait 12.8
Qatar 11.5
6% MSCI Arabian Markets 12.6
5% MSCI GCC Countries 12.8
MSCI Egypt 7.0
1% Saudi Arabia 15.1
UAE 6.9
Iran 10.9
%
Turquoise Iran Fund* 12.3
Sub Fund B/C, as of ending March 2020
Note: Annual data from 1995 to March 2020 Source: CBI, TSE, IFB
All figures in US$ are converted from IRR at the free market rate
Iran & International Markets
3 4
Tehran Stock Exchange MSCI Emerging Markets MSCI Frontier Markets
Average P/E Average P/E Average P/E
10.9 12.5 10.0
1
1-Year Performance in $ 1-Year Performance in $ 1-Year Performance in $
137.3% -17.4% -18.7%
Annualized 10 Year in $ 2
Annualized 10 Year in $ Annualized 10 Year in $
9.8% 1.0% 1.4%
22.4 Chemicals 21.6 Financials 52.4 Financials
13.7 Basic Metals 16.9 Information Technology 14.7 Communication Services
Sector Breakdown (%)
Sector Breakdown (%)
Sector Breakdown (%)
8.9 Refined Petroleum 15.4 Consumer Discretionary 9.9 Real Estate
7.6 Metal Ores Mining 13.1 Communication Services 7.1 Consumer Staples
7.3 Monetary intermediation 6.7 Materials 4.2 Materials
40.1 Others 26.41 Others 11.7 Others
1.TEDPIX Tehran Exchange Dividend Price Index (Dividend & Price Index) performance calculated in US$ for the Period of March 2019 to March 2020
2.TEDPIX Tehran Exchange Dividend Price Index (Dividend & Price Index)10 year annualized performance calculated in US$
3.MSCI Emerging Markets Index (US$) - March 2020
4.MSCI Frontier Markets Index (US$) - March 2020
Source: Tehran Stock Exchange - Central Bank of Iran - MSCI Inc., Kamcoonline.
All figures in US$ are converted from IRR at the free market rate, unless otherwise indicated.
10 Iran Investment MonthlyMarket Overview
April & May 2020 - Volume 14, No 159
Market Snapshot -April 2020 Iran & Regional Markets
Iran: A 25-Year Snapshot, Asset Class Annualized Return in US$ (%) P/E Multiple Comparison
13% MSCI Morocco 16.9
Kuwait 13.3
Qatar 12.9
5% MSCI Arabian Markets 12.6
5% MSCI GCC Countries 13.7
MSCI Egypt 7.5
1% Saudi Arabia 28.6
UAE 8.0
Iran 18.2
%
Turquoise Iran Fund* 18.6
Sub Fund B/C, as of ending April 2020
Note: Annual data from 1995 to April 2020 Source: CBI, TSE, IFB
All figures in US$ are converted from IRR at the free market rate
Iran & International Markets
3 4
Tehran Stock Exchange MSCI Emerging Markets MSCI Frontier Markets
Average P/E Average P/E Average P/E
18.2 13.3 10.6
1
1-Year Performance in $ 1-Year Performance in $ 1-Year Performance in $
264.1% -11.7% -13.4%
Annualized 10 Year in $ 2
Annualized 10 Year in $ Annualized 10 Year in $
10.0% 1.8% 2.1%
22.4 Chemicals 20.9 Financials 50.9 Financials
13.7 Basic Metals 17.0 Information Technology 17.7 Communication Services
Sector Breakdown (%)
Sector Breakdown (%)
Sector Breakdown (%)
8.9 Refined Petroleum 15.3 Consumer Discretionary 10.7 Real Estate
7.6 Metal Ores Mining 1.3 Communication Services 7.5 Consumer Staples
7.3 Monetary intermediation 7.0 Materials 4.4 Industrials
40.1 Others 38.47 Others 8.9 Others
1.TEDPIX Tehran Exchange Dividend Price Index (Dividend & Price Index) performance calculated in US$ for the Period of April 2019 to April 2020
2.TEDPIX Tehran Exchange Dividend Price Index (Dividend & Price Index)10 year annualized performance calculated in US$
3.MSCI Emerging Markets Index (US$) - April 2020
4.MSCI Frontier Markets Index (US$) - April 2020
Source: Tehran Stock Exchange - Central Bank of Iran - MSCI Inc., Kamcoonline.
All figures in US$ are converted from IRR at the free market rate, unless otherwise indicated.
11 Iran Investment MonthlyMarket Overview
April & May 2020 - Volume 14, No 159
TSE & Junior Market Performance
Tehran Stock Exchange: TEDPIX*, March 2020
Normalised in US$
Normalised in US$
Volume million shares
Million Shares
Source: Tehran Stock Exchange
*TEDPIX Tehran Exchange Dividend Price Index (Dividend & Price Index)
All figures in US$ are converted from IRR at the free market rate, unless otherwise indicated.
Iran Farabourse (Junior Market): IFX*,March 2020
Normalised in US$
Normalised in US$
Volume million shares
Million Shares
Source: Iran Farabourse Company
*Iran Farabourse (Junior Market) Overall Index (Total Return)
All figures in US$ are converted from IRR at the free market rate, unless otherwise indicated.
12 Iran Investment MonthlyMarket Overview
April & May 2020 - Volume 14, No 159
TSE & Junior Market Performance
Tehran Stock Exchange: TEDPIX*, April 2020
Normalised in US$
Normalised in US$
Volume million shares
Million Shares
Source: Tehran Stock Exchange
*TEDPIX Tehran Exchange Dividend Price Index (Dividend & Price Index)
All figures in US$ are converted from IRR at the free market rate, unless otherwise indicated.
Iran Farabourse (Junior Market): IFX*,April 2020
Normalised in US$
Normalised in US$
Volume million shares
Million Shares
Source: Iran Farabourse Company
*Iran Farabourse (Junior Market) Overall Index (Total Return)
All figures in US$ are converted from IRR at the free market rate, unless otherwise indicated.
13 Iran Investment MonthlyMarket Overview
April & May 2020 - Volume 14, No 159
Top Ranked Companies - March 2020 Turnover Value % Total Turnover
(million US$)
Tamin Petroleum
24.1
Tamin Oil, Gas and Petrochemical Investment Company was
formed with the merger of Tamin Oil and Gas holding with Tamin & Petrochemical 0.5%
Petrochemical and Chemical Industries holding in 2011. The
company is invested in 19 listed companies and 19 non-listed
Investment Co.
companies in the oil products, petrochemical, chemical and
rubber industries.
Esfahan Oil Refining Co. has 23% of Iran’s refining capacity with
a nominal capacity of 375,000 barrels per day. The company
provides petroleum products for Esfahan Petrochemical Co.,
Isfahan Oil
Refinery 7.8 0.2%
Arak Petrochemical Co., Sepahan Oil Co., Jey Oil Co. and
Top 5 Traded by Value
National Petrochemical Co. of Iran. Esfahan Oil Refining
Co. started gasoline production as of 2013.
Sadr Tamin
Founded in 1999 as the first holding company in
Investment
Co.
6.4 0.1%
Ceramic and Mineral products in the country.
Founded in 1966 as the branch office Iran Darou
of CYANAMID KBC an American
pharmaceutical company, the company
Pharmaceutical Co. 6.0 0.1%
was listed in stock market in 2001.
Currently the company produce more
than 95 different types of medicines.
Iran Chemical
Industries
5.9
Iran Chemical Industries Investment
Co. (ICIIC) established in 1988 0.1%
Investment Co.
in Isfahan. The company
manufactures variety of chemical
products in the country.
Market Cap % Total Market Cap.
(million US$)
Founded in 1962, Iran Khodro Industrial Group (also known as IKCO) is the
Iran Khodro
20,802 17.3%
leading Iranian vehicle manufacturer. IKCO produces c.65% of all domestic
vehicles, and is the largest automotive manufacturer in the Middle East.
Persian Gulf
7,079
PGPIC was established in the first phase of the privatization of Iran’s
petrochemical sector when the National Petrochemical Company Petrochemical 5.9%
(NPC) transferred its shares in a number of petrochemical Industry
companies to PGPIC, paving the way for the formation of Iran’s first
Top 5 by Market Capitalization
private petrochemical holding company. NPC has continued in its
role as a policy making body.
Mobarakeh Steel
Esfahan Mobarakeh Steel Company, one of the largest
industrial complexes in the country, started its operation in
1991 with a nominal capacity of 2.4 million tons per annum.
Manufacturing 5,788 4.8%
The company produces more than 50% of Iran’s steel and
operates in seven industrial complexes.
Golgohar Mining
4,353 3.6%
Founded in 1991, Golgohar Mining & Industrial
Company is one of the largest iron ore and iron and Industrial
pellet producers in Iran. The company operates Company
in combined plants among six iron mine zones
about 55 km southwest of Sirjan city near
Kerman province.
In 1972, Sarcheshmeh Copper Mines Joint National Iranian
Stock Co of Kerman was established and,
later, in 1976, it was renamed to National
Copper Ind. Co. 4,339 3.6%
Iranian Copper Industries Co. to cover all
copper mines operations throughout the
country.
Source: Tehran Stock Exchange, Firouzeh Asia Brokerage. All figures in US$ are converted from IRR at the unofficial rate.
14 Iran Investment MonthlyMarket Overview
April & May 2020 - Volume 14, No 159
Top Ranked Companies - April 2020 Turnover Value % Total Turnover
(million US$)
Established in 1991, the company is active in investment,
management and restructuring of companies and currently
Ghadir Investment 15.0 0.2%
has 130 subsidiary companies under the management. The Company
company was listed in TSE in 1995.
Founded in 1985, Azarab Industries Company is the leading
Iranian industrial contractor in the area of construction,
AzarAb Industries
14.0 0.1%
development and procurement of power plants, oil, gas,
petrochemical and steel industries. The company has
Top 5 Traded by Value
also undertaken projects in oil refineries constructions.
PGPIC was established in the first phase of the privatization Persian Gulf
of Iran’s petrochemical sector when the National
Petrochemical Company (NPC) transferred its shares
in a number of petrochemical companies to PGPIC,
Petrochemical
Industry
12.6 0.1%
paving the way for the formation of Iran’s first private
petrochemical holding company. NPC has continued in
its role as a policy making body.
Iranian Investment
Founded in 2011, Iranian Investment
Petrochemical Group Company (IIPGC)
Petrochemical
Group Company 10.5 0.1%
is an investment holding company
specialized in the petrochemical sector.
10.4
Mapna Group is the largest and MAPNA Group
most well-known Iranian enterprise 0.1%
operating in the construction and
development of thermal power
plants.
Market Cap % Total Market Cap.
(million US$)
Persian Gulf
PGPIC was established in the first phase of the privatization of Iran’s
petrochemical sector when the National Petrochemical Company (NPC)
transferred its shares in a number of petrochemical companies to PGPIC,
Petrochemical
Industry
15,612 7.2%
paving the way for the formation of Iran’s first private petrochemical holding
company. NPC has continued in its role as a policy making body.
Mobarakeh Steel
Esfahan Mobarakeh Steel Company, one of the largest industrial
complexes in the country, started its operation in 1991 with a nominal
capacity of 2.4 million tons per annum. The company produces
Manufacturing 11,985 5.5%
more than 50% of Iran’s steel and operates in seven industrial
Top 5 by Market Capitalization
complexes.
In 1972, Sarcheshmeh Copper Mines Joint Stock Co of National Iranian
Kerman was established and, later, in 1976, it was renamed
to National Iranian Copper Industries Co. to cover all copper
mines operations throughout the country. This company
Copper Ind. Co. 8,217 3.8%
is active in extraction & utilization of copper mines,
production of copper concentrates & manufacturing
copper products.
The Social
6,374
Established in 1986, the company is the
investment arm of Social Security Insurance Security Investment 2.9%
Holding. The company has a diversified sector
investment portfolio including oil & gas, mining,
Company
pharmaceutical, energy, cement and banking
sectors.
Chadormalu
Chadormalu Mining and Industrial Company
is the largest iron ore producer in the
country with more than 34% share of Iran’s
Mining & Industrial
Co. 5,180 2.4%
total production.
Source: Tehran Stock Exchange, Firouzeh Asia Brokerage. All figures in US$ are converted from IRR at the unofficial rate.
15 Iran Investment MonthlyMarket Overview
April & May 2020 - Volume 14, No 159
Iran’s Fixed Income Market
For the Iranian calendar year 1398 (March 2019 to end March 2020), total issuance on the fixed income
market reached 6 billion US$ based on the unofficial exchange rate. Yield to maturity (YTM) remained
at 18.8% at the end of March 2020.
Iran’s Debt Securities Market - March 2020*
0.75
Tehran Stock Exchange
6.6
Iran Farabourse (Junior Market)
Market Value (billion US$)*
6.62
Tehran Stock Exchange
59.35
Iran Farabourse (Junior Market)
Average Daily Trading Value (million US$)*
1,105,200 10,989,450
Iran Farabourse (Junior Market)
Tehran Stock Exchange
Average Daily Trading Volume (bonds)
* As of Esfand 1398 (20 Feb 2020 - 19 March 2020)
Value & Breakdown of Sukuk Issuance in Iran’s Capital Markets, 2020 (1398)** - (billion US$)
47% 24% 6% 8% 11% 3%
Source: Iran Farabourse
**Calculated by the unofficial exchange rate in the period of issuance, percentages have been rounded and may not total to 100.
16 Iran Investment MonthlyMarket Overview
April & May 2020 - Volume 14, No 159
Iran’s Fixed Income Market
For the start of the Iranian calendar year (March 2020) to end April, total issuance on the fixed income
market reached 0.28 billion US$ based on the unofficial exchange rate. Yield to maturity (YTM) declined
to 16% at the end of April.
Iran’s Debt Securities Market -April 2020*
0.67
Tehran Stock Exchange
6.3
Iran Farabourse (Junior Market)
Market Value (billion US$)*
1.65
Tehran Stock Exchange
15.06
Iran Farabourse (Junior Market)
Average Daily Trading Value (million US$)*
272,000 3,170,600
Iran Farabourse (Junior Market)
Tehran Stock Exchange
Average Daily Trading Volume (bonds)
* As of Farvardin 1399 (20 March 2020 - 20 April 2020)
Value & Breakdown of Sukuk Issuance in Iran’s Capital Markets, 2020 (1399)** - (billion US$)
100%
Islamic T-Bills
Source: Iran Farabourse
**Calculated by the unofficial exchange rate in the period of issuance, percentages have been rounded and may not total to 100.
17 Iran Investment MonthlyMarket Overview
April & May 2020 - Volume 14, No 159
Iran’s Fixed Income Market
Snapshot of the Highest Yielding Debt Securtites1 - March & April 2020
Issuer Type YTM (p.a.) Maturity
Government Ijara 0.190 14-Aug-21
Government Ijara 0.190 14-Aug-21
Government Ijara 0.190 14-Aug-21
Corporate Ijara 0.190 14-Aug-21
Government Manfeat 0.190 6-Aug-23
Government TreasuryBill 0.190 2-Feb-22
Government TreasuryBill 0.190 2-Feb-22
Government TreasuryBill 0.190 2-Feb-22
Corporate TreasuryBill 0.190 2-Feb-22
Government TreasuryBill 0.190 2-Feb-22
1
This snapshot is a selection of the highest yielding securities with minimum one year maturity in Iran’s debt markets and should not be considered as a solicitation or recommendation by Turquoise Partners.
Iran’s T-bills YTM in IRR Term
April 2020
0.16%
Source: Tehran Stock Exchange - Iran Farabourse
18 Iran Investment MonthlyEconomic Review
April & May 2020 - Volume 14, No 159
Latest Updates
Housing Market
March 2020 : In the Tehran housing market, the highest average transaction value was found in District 1 (north Tehran)
at 313.2 million IRR per square meter (1,997 US$ at a rate of 156,800 IRR/US$), and the lowest was in District 18 at
74.1 million IRR per square meter (473 US$) per square meter. In IRR terms, the highest and lowest average transaction
value increased by 29% and 52% compared to the same period last year, respectively. Transactions between 574 US$
and 670 US$ per square meter were the most common, accounting for 9.7% of total transactions. The average rent for
residential units in Tehran city increased 29% over the 12-month period. According to the CBI, rent is one of the main
costs for households, accounting for 33% of total household spending.
• In March 2020, the first month of Iranian Calendar Year (Farvardin 1399) some 1,200 residential units were sold in
Tehran, down 64% from the same month last year.
• Highest allocation in the number of transactions were registered in districts 5, 2 and 4, with share of 16%, 9% and
8%, respectively.
April 2020 : In the Tehran housing market, the highest average transaction value was found in District 1 (north Tehran)
at 339 million IRR per square meter (2,084 US$ at a rate of 162,700 IRR/US$), and the lowest was in District 18 at 87
million IRR per square meter (538 US$) per square meter. In IRR terms, the highest and lowest average transaction
value increased by 30% and 33% compared to the same period last year, respectively. Transactions between 738 US$
and 830 US$ per square meter were the most common, accounting for 9% of total transactions. The average rent for
residential units in Tehran city increased 29% over the 12-month period. According to the CBI, rent is one of the main
costs for households, accounting for 32% of total household spending.
• In April 2020, the second month of Iranian Calendar Year Ordibehesht 1399) some 11,310 residential units were
sold in Tehran, down 7% from the same month last year.
• The average selling price per square meter in the residential sector inclined by 11% in US$ term, compared to the
same period last year.
• Highest allocation in the number of transactions were registered in districts 5, 2 and 4, with share of 16%, 9% and
8%, respectively.
Annual Chg.
Housing Market Development Apr-19 Mar-20 Apr-20
(% April 2020 Vs. April 2019)
Number of Transactions (units) 12,128 1,243 11,310 -6.7%
Average Price Per Square Meter (Million IRR) 127 153 170 33.9%
IRR Per US$ 134,500 166,200 162,700 21.0%
Average Price Per Square Meter (US$) 942 920 1,043 10.7%
Source: CBI
19 Iran Investment MonthlyEconomic Review
April & May 2020 - Volume 14, No 159
Inflation Targeting
Inflation Targeting is a monetary policy framework to provide a nominal anchor to the economy. The aim is to assist
policymakers to tie down other nominal variables and overall price levels. In the past, central banks used a currency
peg anchor that linked the value of the domestic currency to the value of the currency of a low-inflation country.
This approach had its own cons such as exposing the economy to the external shocks coming from countries
with lower inflation. Instead of using a pegged currency, many central banks began to target the money supply
growth and inflation over time. Inflation targeting is straightforward in theory. First, the government estimates which
rate is the appropriate rate for the economy. Second, the central bank forecasts the future path of inflation and
compares it with the targeted rate. Third the difference between the forecast and the target rate determines to
what extend the monetary policy should be adjusted. The main advantage of inflation targeting is to combine the
elements of “rules” and “discretion” in monetary policy. Rather than focusing on achieving the target at all times,
the approach emphasizes achieving the target over the medium term—typically over a two to three-year horizon.
This allows policy to address other objectives—such as smoothing output—over the short term. Thus, inflation
targeting provides a rule-like framework within which the central bank has the discretion to react to shocks. Because
of inflation targeting’s medium-term focus, policymakers need not feel compelled to do whatever it takes to meet
targets on a period-by-period basis.
In mid May 2020, the Central Bank of Iran (CBI) set a 22% inflation target and identified an upper or lower limit of 2
percentage points for the current fiscal year that ends in March 2021. According to the CBI governor, the bank will
use multiple policy instruments to implement “inflation targeting”.
20 Iran Investment MonthlyEconomic Review
April & May 2020 - Volume 14, No 159
Macroeconomic Data
Iran Economic & Market Data Data Macroeconomic Forecast
Calendar
Unit 2020/ 21 2021/ 22 2022/ 23
SCI: CPI by Provinces in the Month of Nominal GDP (Billion US$) 463 476 496
Farvardin of the Year 1399 Released:
09 May 2020
Real GDP Growth (%) 0.0 1.0 1.0
SCI: National Consumer Price Index by
Expenditure Deciles: in the Month of Inflation (%) 31 29 27
Farvardin of the year 1399
Released: 03 May 2020
Government Net Lending Borrowing (% GDP) -5.0% -5.6% -6.1%
SCI: Consumer Price Index in the Month of
Farvardin of the Year 1399 Current Account Balance (% GDP) -3.4% -3.4% -3.3%
Released: 25 April 2020
SCI: Consumer Price Index in the Month of
Esfand of the Year 1398
Released: 08 April 2020
Actual Macroeconomic Data
Unit Period Value Comments
Population Growth % 2011- 2016 1.24% -
1398
Unemployment Rate % 10.70% -
(Mar 19 - Mar 20)
Inflation Rate % Apr-20 (Y/Y) 29.8% 2016 = 100
9m 1398
Non-oil GDP Growth % 0.0% 2011 = 100
(Mar-Dec 2019)
9m 1398
GDP Growth % -7.6% 2011 = 100
(Mar-Dec 2019)
Sources: IMF, Central Bank of Iran, Statistical Center of Iran
21 Iran Investment MonthlyNews & Views
April & May 2020 - Volume 14, No 159
Recent Brokerage Report Turquoise News
Iran Daily Market Update – May 2020 February 9, 2020
The Turquoise Venture Capital Fund started its public
May 6, 2020 market subscription on the Iran Farabourse exchange from
Feb 9th, 2020 for a period of 7 days. The Fund however was
May 5, 2020
oversubscribed on the 3rd day and was able to raise money
May 4, 2020
from a solid mix of both institutional and private investors. This
public market subscription set a record within the Iranian capital
May 3, 2020 markets for the venture capital funds, which was a positive news
for the Iranian start-up ecosystem.
May 2, 2020 More Information in Persian
October 2, 2019
Turquoise Partners unveiled an online system to ease
investment in start-ups at Iran National Library.
More Information
September 17, 2019
On Tuesday, September 17, 2019, the Director of Trade,
Investment and Innovation Department at the United Nations
Industrial Development Organization (UNIDO) and his colleagues
had a meeting with Turquoise Partners. In this meeting, which
was held at the Turquoise Office, entrepreneurial opportunities
in the Iranian tech scene and frontier markets were discussed.
More Information
22 Iran Investment MonthlyNews & Views
April & May 2020 - Volume 14, No 159
Asset
• EU Regulated Equity Fund
Management • EU Regulated Fixed Income Fund
• Domestic Fixed Income Fund
• Domestic ETF TSE-30
• Domestic Mutual Fund
• Managed Accounts
Investment
•
Banking Services • M&A
• ECM
• DCM
• Private Placement
• Institutional Equity Sales
• Retail Equity Sales
• Market Entry Strategy
Principal Strategic
Investment s
23 Iran Investment MonthlyApril & May 2020 - Volume 14, No 159
Turquoise Partners
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Tel: + 98 21 22 70 62 38 Fax: +98 21 881 07 746
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