EghtesadOnline: Iran’s stock market made funds available for businesses to the tune of 1,290 trillion rials ($9.9 billion) in the first nine months (March 20- Dec 21) of current fiscal year, the Tehran Chamber of Commerce, Industries, Mines and Agriculture said.
This is up 196% compared to the corresponding period last year when businesses generated 556 trillion rials through the capital market, signifying a bigger contribution of the bourse to recapitalize businesses, the TCCIM website reported.
TCCIM reports on two types of finance, namely equity financing and debt financing. The share of equity financing increased from 202 trillion rials in December 2018 to 598 trillion rials ($4.6 billion) in December 2019, Financial Tribune reported.
Likewise, debt financing amounted to 692 trillion rials ($5.3 billion), rising from 354 trillion rials at the end of 2018.
Equity financing is the method of raising capital by selling company stock to investors while debt financing occurs when a firm raises money for working capital by selling debt instruments to individuals and institutional investors.
The amount secured by the companies through initial public offering have been meager at 5%, according to TCCIM, despite the fact that the number of IPOs in Tehran Stock Exchange and the over-the-counter equity market, Iran Fara Bourse, grew two and a half times in the first nine months.
Also, bonds issued by the government had the lion’s share of finance as corporate bonds accounted for the 3.5% of the bond market.
Both markets have hosted more than 15 IPOs since the beginning of the year, though stock market officials say more IPO are expected before the end of the current fiscal in March.
Despite expanding role of the stock market in funding businesses, Iran’s economy largely reliant on banks for funds. But because of the limited lending capability of bank, companies are increasingly turning to the stock market for funds.
According to Mohammadreza Pourebrahimi, a member of the Majlis Economic Commission, banks handle 80% of funding for companies.
Recently, the Ministry of Industries, Mining, and Trade said plans call for a bigger role for the stock market in funding industries.
In the same vein, Mohsen Khodabakhsh, an official with the Securities and Exchange Organization said almost 1,290 trillion rials ($9.9 billion) has been injected into the stock market since the beginning of current fiscal year (March 2019) up until December 21.
In the month-long period ending Jan 12, more than 103.9 billion shares worth 531 trillion rials ($4 billion) were exchanged in 10.9 million deals in the TSE.
The figures indicate 46% and 40% rise, respectively, in value and volume of deals during the period compared to the same period a month earlier. The number of deals also rose 21% on a monthly basis.
On Jan. 12, the main index of TSE, TEDPIX, stood at 392,038 points, indicating a dramatic growth of 119% compared to the beginning of fiscal year in March 2019.
The value and volume of trade in the Iran Mercantile Exchange during the month to Jan 12 rose 2% and 5%, respectively, compared to a month earlier.
Investors traded 2.9 million tons of goods worth 13.3 trillion rials ($) via the IME while 2.7 million tons of goods valued at 13 trillion rials were sold in the market in the previous month.
Industrial products grabbed the lion’s of shares of deals at the commodity market at 47.8%. This was followed by petrochemicals and oil products, respectively accounting for 27.8% and 14.1% of the IME deals.
Iran’s capital market has four branches, namely Tehran Stock Exchange, Iran Fara Bourse (over-the-counter market), Iran Energy Exchange and Iran Mercantile Exchange.