Cold welcome to the first sale of 1401 bonds
According to Tejarat News, the stock market index last week, after several days of conflict with the level of 18.6 million units, finally failed to cross the psychological border, with a retreat of 10.9%, currently failing to cross the 19-month peak. Combining graphic resilience with fundamental factors in the form of disappointing winter performance reports from most companies has eroded previous optimism that the rally could continue in the short term.
Quoted from the world of economyIn this regard, the decrease of more than 20% in the value of daily retail transactions compared to the second half of May, after a boom wave, could indicate a weakening of the demand side and a sharpening of price correction scenarios in the short term. At the same time, despite the stability of the free dollar at acceptable levels, the dollar exchange rate in the Nima system, as the main channel for converting exporters’ currencies into rials, is one step behind and fluctuates in the channel of 241 thousand tomans.
It seems that after the elimination of USD 4,200 and the conversion of the import currency of basic goods to half, the sensitivity of pricing in this system has increased and a significant increase in the difference between this rate and the free market has taken place.
In the global arena, despite the rise in oil prices, the prices of basic metals, minerals and petrochemicals still do not show signs of re-rise, which in turn does not contribute effectively to the investment climate in the shares of large companies on the Tehran Stock Exchange.
Cold welcome to the first sale of 1401 bonds
After a break of more than two months, the sales process is finally over Papers Government debt in the capital market resumed in order to pave the way for government financing in the new year by offering two auctions of 50,000 billion tomans with a maturity of one and two years with interest rates of 21.5 and 21.8 percent, however, buyers welcomed these two auctions. It was relatively weak, with only about one-third of the securities sold.
Meanwhile, the third day of June coincided with the maturity of 160,000 billion tomans of government bonds, the volume of which Papers Sold, the coverage covers about half the repayment amount. On the other hand, the monthly inflation rate of consumer goods and services in May, equivalent to 3.5 percent, was reported by the Statistics Center of Iran to reflect the bulk of the effect of rising commodity prices on inflation in June. With the current trend, the annual inflation rate is expected to remain more than 301% in 1401.
Thus, one of the reasons for the lack of acceptance of government bonds at the current stage can be related to the large gap between bond yields and expected inflation, which has reduced the attractiveness of investing in these bonds. Meanwhile, the central bank has generally had a contractionary guard in the new year, and by reducing the volume of so-called open market operations (buying government bonds from banks in exchange for monetary base borrowing), it has reduced the accumulated injection of money by about 20,000 billion tomans.
If the government wants to adhere to the requirements of financing without borrowing from the Central Bank (according to the announcement of the Program and Budget Organization), a relative increase in profits Papers Will be considered as an option for financing; An option that, given the central bank’s disciplinary approach, could have an anti-inflationary effect on the economy and be effective in controlling inflammation in asset markets.
Warm reaction to cold winter reports
A study of corporate reports published in the fourth quarter of the previous year so far shows that this season has been the worst period in terms of profitability since the fall of 1999. In this regard, the average profit margin of 121 months of companies, according to published reports, has fallen to less than 30%, which, although far from the peak of this figure earlier in the year (39%), but still higher than the average of the last two decades (23%) .
At present, it is possible that with the significant increase in wage costs and the relative stabilization of the exchange rate in the Nima system, the general trend of decreasing market profit margins will continue this season.
In response to this event, although the heat of the previous stock climb was reduced, the reaction of investors was relatively mild compared to the quality of the published reports.
Under normal circumstances, the release of such actions could lead to a significant drop in stock value, however, due to the prevailing inflationary atmosphere in the minds of most investors, both buyers and sellers seem to be very careful in their transactions; A situation that arises from the preference to hold assets (including stocks) in the current position.
Controversy this time over utility
Petrochemical complexes can be divided into two categories. The first group are companies that have their own infrastructure services (including electricity generation, steam generation, cooling water, etc.) independently. Companies such as Khorasan Petrochemical and Kermanshah on the Tehran Stock Exchange are in this category. The second group includes companies such as Pardis Petrochemical, Zagros, Amirkabir, etc., which do not have the possibility to provide these infrastructure services and depend on other independent complexes (Mobin and Fajr Petrochemical) to provide it.
For a long time, there has been controversy over how to provide these services to affiliated companies, and as these companies entered the capital market, the string of stakeholders in both camps became more prominent. The result of this dispute eventually led to the referral of the matter to the Competition Council, and this authority, in a strange move, tied the annual rate of the services in question to the return on assets of petrochemical companies to determine the cost of consumer services with fluctuations in profitability.
In a new development, based on the claims of Mobin and Fajr Group, the Competition Council has taken action to address the companies’ objections and revise the formula, and as a result, the service rate has jumped many times over. On the other hand, despite claiming that the new formula was not accepted and objected to, consumers in their winter reports mainly (except for Pardis Petrochemical) included utility costs as reserves in the financial statements, which resulted in loss or performance after the cost was recorded in the winter.
On the other hand, there is an expectation of a significant increase in the profitability of Fajr and Mobin companies compared to the previous year. In a general picture, it can be said that the imbalance created by the currency jump and the disturbance of relative prices in the whole Iranian economy is moderating; A situation that means eliminating the distortions caused by the devaluation of the national currency and returning the space of economic activity and operating profit margins of enterprises to the period before the currency adjustment.