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Capital Market 15 ECONOMIC REPORT AND BALANCE SHEET 1385 CHAPTER CAPITAL MARKET 15 he downturn in Stock Exchange, • The Instruction for approving the which had started in the second qualifications of directors of brokerage firms; half of 1383, accelerated in 1384 and ran into 1385. Although most • The Articles of Association of the T TSE; indices slightly improved in the review year, the changes were not much significant to boost the stock market. Certain factors were respon- • The Instruction concerning the pro- sible for this slump, namely continued inter- cedures of issuing the license for establish- national tension over Iran's peaceful nuclear ment of stock exchanges, associations and program, implementation of price stabilizing financial institutions by the Securities and policies, reduction in lending rates, restruc- Exchange Organization; turing of stock market, and change in internal • The Instruction concerning the proce- mechanisms of Stock Exchange. dures of approving the qualifications of direc- tors of stock exchanges; Upon ratification of the Law Governing the Securities Market in the Islamic Republic • The Executive Instruction for port- of Iran by the Parliament in 1384, the Cabinet folio management (approved by the Board approved the executive by-law of the men- of Directors of the Securities and Exchange tioned Law, as well as the organizational Organization); structure of the Securities and Exchange Organization in 1385. Moreover, the follow- • The Articles of Association of the ing by-laws and instructions concerning the Securities and Exchange Brokers Associ- stock exchange were prepared in the review ation (SEBA); and year: • The Instruction for formation and reg- • The By-law concerning trading on istration of associations active in the secu- the TSE; rities market. • The Instruction for registration of shares and securities as well as public share Share Trading offering; During the review year, a number of • The Instruction for trading shares 15,784.4 million shares and rights worth listed on the unofficial board; Rls. 55,644.2 billion were traded on the TSE. These figures indicate 8.8 percent increase • The Executive Instruction for part of in the number, and 1.6 percent decrease in provisions of the Disciplinary Regulations of the value of trading compared with the pre- the companies listed on the stock exchange; vious year. 79 Chapter 15 CAPITAL MARKET Of the total shares and rights traded, terms of volume and value, respectively, in 70.6 percent were traded on the main and the second half of this year. 29.4 percent on the secondary floor. Further- Figure 15.1. TSE share trading more, in terms of value of trading, 73.2 per- cent were traded on the main and 26.8 percent on the secondary floor. In the review 120 year, the TSE was active for 239 days. The Value of trading (trillion rials) average daily volume and value of trading were 66 million shares worth Rls. 232.8 billion, 90 indicating 11.1 and 0.5 percent growth, respec- tively, compared with the year before. 60 A comparison of trading in the first and 30 second halves of 1385 reveals that out of Volume of trading (billion shares) total trading, 40 percent in terms of volume and 36.7 percent in terms of value were traded 0 1381 1382 1383 1384 1385 in the first half, and 60 and 63.3 percent in TSE SHARE TRADING Volume of trading Value of trading Number Average Average (million shares) (billion rials) of trading volume of value of daily days of daily trading trading Shares Rights Total Shares Rights Total TSE (million shares) (billion rials) 1384 13,370.8 1,132.1 14,502.9 55,558.6 970.1 56,528.8 244 59.4 231.7 1385 15,467.1 317.3 15,784.4 54,828.2 816.0 55,644.2 239 66.0 232.8 Source: TSE, monthly reports SHARES AND RIGHTS TRADING Figure 15.2. Comparison of price and dividend ON THE TSE (share percent) index growth with inflation Volume Value (percent) 1st half 2nd half 1st half 2nd half Price and dividend index growth Inflation 1384 59.9 40.1 65.6 34.4 160 1385 40.0 60.0 36.7 63.3 120 Source: TSE, monthly reports 80 Data on shares and rights traded on 40 (1) the TSE, by 36 classified industries , reveal that "basic metals" had the highest shares of 0 17.3 and 16.4 percent, respectively, out of -40 total volume and value of shares and rights 1381 1382 1383 1384 1385 traded in 1385. "Basic metals", "exploitation (1) As of Dey 1383, industrial classification in the TSE was revised and companies were reclassified based on the ISIC. 80 ECONOMIC REPORT AND BALANCE SHEET 1385 of metallic ores", "automobile and manufac- Number of buyers reached 987,404 persons, ture of spare parts", "multi-field industrial cor- representing 17.5 percent decline in 1385 porations", and "mass production of properties compared with the previous year. Reduction and real estates", holding 56.7 percent of in the number of buyers was 23.8 percent total shares and 62.4 percent of total value of last year. The average buying per person in- shares and rights traded, had the highest creased to Rls. 56.4 million, showing a rise impact on the TSE. of 19.3 percent compared with the preceding year. The average volume of buying per The number of shares and rights person rose by 31.9 percent to 15,985.7 trading was 1.9 million times, indicating a shares. These figures point to reduction in reduction of 12.1 percent compared with the the number of small shareholders trading in fall of 9.6 percent in the preceding year. the stock exchange in recent years. NUMBER OF TRADINGS AND BUYERS Percentage change 1383 1384 1385 1384 1385 Number of tradings 2,340,647 2,115,244 1,858,999 -9.6 -12.1 Number of buyers 1,570,492 1,196,545 987,404 -23.8 -17.5 Average volume of buying per person (shares) 9,023.6 12,120.7 15,985.7 34.3 31.9 Average value of buying per person (million rials) 66.0 47.2 56.4 -28.5 19.3 Source: TSE, monthly reports Market capitalization went up by 21.3 The turnover ratio (2) reached 16.3 per- percent to reach Rls. 395,028.2 billion in cent in the review year, up by 0.7 percentage 1385. Meanwhile, based on the average inter- point against 15.6 percent in 1384. More- (1) bank exchange rate , market capitalization over, the ratio of shares traded to shares is- in terms of dollar reached $42.7 billion, sued decreased by 15.4 percent to 11.6 per- registering a rise of 19.9 percent compared cent. The corresponding figure of the pre- with the previous year-end. Moreover, the vious year was 13.7 percent. ratio of market capitalization to GDP remained virtually unchanged at 19.4 percent as com- pared with the previous year. MARKET CAPITALIZATION, TURNOVER RATIO, AND (1) (2) THE RATIO OF SHARES TRADED TO SHARES ISSUED (billion rials) Market Market Ratio of shares capitalization capitalization Turnover ratio traded to shares (year-end) Value of trading (average) (percent) issued 1384 325,727.8 56,528.8 363,417.3 15.6 13.7 (-16.0) (-45.5) (-2.9) 1385 395,028.2 55,644.2 341,002.6 16.3 11.6 (21.3) (-1.6) (-6.2) Source: TSE, monthly reports (1) Excludes trading of participation papers. (2) Figures in parentheses indicate percentage change over the previous year. (1) On the last active day of the TSE in 1385, dollar was (2) It is the ratio of trading value to average current value of exchanged at a rate of Rls. 9,243. shares in the review year. 81 Chapter 15 CAPITAL MARKET Tehran Stock Exchange Dividend and Figure 15.3. TSE monthly indices Price Index (TEDPIX) "Dividend and Price Index (TEDPIX)" rose by 14.7 percent to 30,786.5. The two 40000 constituents of this index, i.e., "price" and Dividend and Price Index "dividend" indices, reached 9,821 and 5,182 30000 units, respectively, showing 3.8 and 10.4 per- cent growth. 20000 The P/E ratio reached 5.5 in 1385. Price index This ratio remained virtually unchanged at 10000 the previous year level, which was due to the Dividend index rise in price index and the fall in dividend 0 per share. Price index faced an upward trend 1381 1382 1383 1384 1385 in 1385, despite ebbs and flows in the year before. TSE INDICES (1369=100) Year-end Percentage change 1383 1384 1385 1384 1385 Dividend and Price Index 30,762.0 26,849.8 30,786.5 -12.7 14.7 Dividend index 4,198.1 4,692.2 5,182.0 11.8 10.4 Price index 12,113.0 9,459.4 9,821.0 -21.9 3.8 Financial index 34,205.1 20,941.4 20,770.4 -38.8 -0.8 Industrial index 9,215.0 7,427.3 7,751.6 -19.4 4.4 Main floor 12,085.8 9,135.7 9,781.5 -24.4 7.1 Secondary floor 10,942.4 9,846.3 9,164.2 -10.0 -6.9 Source: TSE, monthly reports Share Offering by Public Sector and Banks In order to expand public participation Figure 15.4. Value and volume of offered shares through disposal of government shares, the Cabinet approved the Plan known as "Increas- (billion rials) ing Iranian Families' Wealth through Rise in the Share of the Cooperative Sector by Dis- 120000 tribution of Justice (Edalat) Shares".
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