The average yielding rate for Islamic Treasury Bills (ITB), corporate bonds and term deposits exceeding $30,000 currently stand at 23%, 16%-23% and 18%-22%, respectively. Rubbing salt into the wound, a black market has been created for ITBs issued by Bank Melli Iran called “Sakhab.” This unregulated bond market was established while the conventional ITB market was blamed for absorbing meager liquidity from the stock market and thus undermining the already feeble TSE.
The rate of return in this informal market hovers around a whopping 35%-40%, to the detriment of the TSE and its investors. Under such circumstances, investment in equities loses its priority and gives way to risk-free assets.
Fluctuating commodity prices also exert a tremendous impact on the earnings of the petrochemical sector. The latter consists of 40 firms and constitutes more than 43% of the TSE market value. According to a monthly report posted by the Securities and Exchange Organization (SEO) for the period between May 22-June 21, the 13% fall in the oil prices in the period was responsible for 703 points negative impact on the TSE All-Share Index.
The index was impacted by almost 847 in the negative territory when all basic materials were included. However, the recent rise in commodities prices globally eased the pain for players of this sector.
In the same vein, the government’s efforts to limit the movement of the US dollar exchange rate has largely played into the hands of importers rather than exporters of commodities. This policy by the Central Bank of Iran has contributed to the slash in revenues for petrochemicals and a loss in interest for such stocks among investors.