Baku, Azerbaijan, Jan. 6
By Farhad Daneshvar – Trend:
The global hike in the prices of commodities and oil as well as Iran’s interest rate decision have apparently left a positive impact on the country’s equity and housing markets over the last year.
Despite the sharp fall of the main index in the very last days of 2017 mostly due to political risks, the main index of the TSE saw a brilliant performance over the year, experiencing a return of 20 percent.
Oil, commodity
Commodity-driven companies have a direct impact on the Tehran Stock Exchange, therefore the price hike in the commodities impacts the market in general.
The global price of copper has surpassed $7,200 per ton, about 35 percent up compared to six months ago.
Oil has reached its strongest level in three years with the Brent topping $68 a barrel for the first time since 2015.
The prices of aluminum, zinc and lead respectively hiked by 34 percent, 24 percent and 28 percent.
In total the commodity-driven companies alongside with refineries respectively saw a growth of 75 percent and 62 percent in 2017.
This is while the value of US dollar against the Iranian rial has increased by nine percent which hugely benefited the commodity-driven companies in the stock exchange.
Considering the fact that a capitalization-weighted index or equal-weighted index is a type of market index with individual components that are weighted according to their total market capitalization, it becomes clear that the large price moves in commodity-driven companies, the largest components of the TSE, had a significant effect on the value of the index.
Interest rates
A decision by the Central Bank of Iran (CBI) on cutting the interest rates on deposits has apparently encouraged the investors to move to parallel markets including the equity market.
The CBI issued its latest directive on Aug. 23 setting a deadline for banks to reduce their deposit interest rates to 15 percent.
The CBI obliged the country’s banks and credit institutions to implement the directive as of September 2.
Under the directive, banks and credit institutions are obligated to adhere to long- and short-term deposit rates set respectively at 15 percent and 10 percent.
Government officials say the Money and Credit Council, the decision-making body of CBI, is eyeing further cuts of loan rates that currently stand at 18 percent.
Housing prices
The central bank decision on the interest rates has also benefited the country’s dull housing market.
The number of sold apartments in capital Tehran, the country’s largest housing market, increased by 50.2 percent over the last calendar month ending to December 22.
According to the latest report by the Central Bank of Iran, about 17,800 housing units were sold in Tehran over the mentioned period.
Per square meter of residential units over the last Iranian month was sold for $1432.5, indicating a growth of 14.9 percent, compared to the same time last year.