ECONOMIC REPORT AND BALANCE SHEET 1388 CHAPTER CAPITAL MARKET 17 he Tehran Stock Exchange indices Rules on the purchasing of state-owned witnessed profound improvements shares floated in the capital market; as of the beginning of 1388 till the month of Mehr of the same year. Regulations regarding Over-the-Counter TThis trend, however, reversed in the months (OTC) Market; of Aban and Azar, and again increased as of Guidelines on the setting of the minimum Dey 1388. These developments largely re- and the maximum amount of fees charged sulted from improvement in international by the Securities and Exchange Organization financial markets, rise in the price of raw for the supervision of trading by Iran's OTC materials, supply of public enterprises' shares Company. under Article 44 of the Constitution, prevailing recession in other domestic markets, and di- versification of financing instruments. Share Trading In the review year, the High Council of During 1388, a number of 85,625.1 million Securities and Exchange formulated and shares and rights worth Rls. 184,166.2 bil- approved a set of rules and guidelines lion were traded on the TSE, indicating including: respectively 78.5 and 34.1 percent growth, in terms of volume and value, compared Regulations regarding futures market with previous year. trading in line with Paragraph 4, Article 4 of the Law Governing the Securities Market; Of total number of shares and rights traded in 1388, 89.9 percent were traded in Executive regulations relating to "op- the primary market and 10.1 percent in the tion", "Istisna", and "mortgage bonds"; secondary market. Moreover, in terms of value of trading, 88.9 percent were traded in Rules on the trading of housing mort- the primary market and 11.1 percent in the gage loan papers; secondary market. 1 TSE Share Trading Number Average Average Volume of trading Value of trading of trading volume of value of day (million shares) (billion rials) days of day trading trading Shares Rights Total Shares Rights Total TSE (million shares) (billion rials) 1387 47,254.9 720.5 47,975.4 136,853.2 532.2 137,385.4 238 201.6 577.2 1388 84,769.5 855.6 85,625.1 183,253.7 912.5 184,166.2 244 350.9 754.8 1 Source: Tehran Stock Exchange (TSE) Including companies listed on the unofficial board 151 Chapter 17 CAPITAL MARKET In the review year, the TSE was active of shares and rights traded on the TSE. In for 244 days. The average volume and value 1388, "banks, credit institutions, and other of day trading were 350.9 million shares and monetary foundations" and "telecommuni- Rls. 754.8 billion, representing respectively cation", holding 69.4 percent of total volume 74.1 and 30.8 percent rise, compared with and 63.9 percent of total value had the 1387. highest impact on TSE trading. A comparison of trading in the first half Figure 17.2. Comparison of price and dividend of 1388 with the second half reveals that out index growth with inflation of total trading, 49.6 percent, in terms of (percent) volume, and 30.2 percent, in terms of value, price and dividend index growth were traded in the first half, and 50.4 and inflation rate (1383=100) 60 69.8 percent, in terms of volume and value, respectively, in the second half of 1388. 40 Shares and Rights Trading on the TSE 20 (share/percent) Volume Value 0 st nd st nd 1 half 2 half 1 half 2 half 1387 53.9 46.1 74.3 25.7 -20 1388 49.6 50.4 30.2 69.8 1384 1385 1386 1387 1388 Source: TSE In 1388, share trading of almost half Figure 17.1. TSE share trading of industries increased as compared with preceding year. The volume and value of shares of 21 industries grew in 1388. volume of trading (billion shares) value of trading (trillion rials) In the review year, "banks, credit institu- 200 tions and other monetary foundations", "tele- communication", and "exploitation of gas oil 150 and other activities, excluding exploration" had the highest impact on the volume of 100 shares and rights traded by respectively 66.3, 19.1 and 4.3 percentage points, compared 50 with previous year, accounting for 89.7 percentage points of total growth. Moreover, 0 1384 1385 1386 1387 1388 "telecommunication", "banks, credit institu- tions and other monetary foundations", and "technical and engineering services" had the Data on shares and rights traded on the highest share in raising the value of shares TSE, by industries, indicate that "banks, credit and rights traded by 46.5, 22.7, and 3.7 institutions, and other monetary foundations", percentage points, respectively, compared with 40.1 percent of total volume of traded with the year before. Securities were traded shares and "telecommunication", with 44.5 for 3.0 million times, indicating 61.6 percent percent of total value of traded shares, had growth compared with the 11.2 percent fall the highest shares in total volume and value in the preceding year. 152 ECONOMIC REPORT AND BALANCE SHEET 1388 Volume of Trading and Number of Buyers Percentage change 1 2 1386 1387 1388 1387 1388 Volume of trading (times) 2,112,065 1,875,372 3,030,379 -11.2 61.6 Number of buyers 1,095,359 540,398 859,584 -50.7 59.1 Average volume of buying per person (shares) 21,363.7 88,778 99,612.2 315.6 12.2 Average value of buying per person (million rials) 66.7 254.2 214.3 281.1 -15.7 1 2 Source: TSE Based on total trading of shares and participation papers Due to the implementation of the new trading system of Stock Exchange as of Azar 16, 1387, calculation assumptions on the number of buyers have changed, leading to a different statistical trend of the mentioned variable. Market capitalization rose by 45.1 percent percent to 51,006.0, compared with 1387. to Rls. 651,428.3 billion at end-1388, compared Tehran Stock Exchange Price Index (TEPIX) with the respective figure of 1387. Furthermore, increased by 57.4 percent to 12,536.7 points based on interbank exchange rate1, market at end-1388, compared with preceding year. capitalization went up by 43.4 percent to TEPIX experienced a continued rising trend $66.2 billion. during the review year, except for the months of Aban and Azar. In the review year, "basic metals", "banks, credit institutions, and other monetary foun- The P/E ratio reached 5.8, indicating 51.3 dations" and "telecommunication" had the percent growth as compared with preceding highest contribution to market capitalization year. by 16.2, 14.2, and 13.1 percent, respectively, Among the components of TEPIX, "finan- (a total of 43.5 percent). Turnover ratio rose cial index" surged by 63.7 percent to 33,641.6 by 3.4 percentage points to 33.5 percent in points compared with the year before. Mean- 1388, compared with the year before. Ratio while, "industrial index" increased by 56.0 of shares traded to shares issued rose by 6.4 percent from 6,172.6 points at end-1387 to percentage points to 29.8 percent, compared 9,629.5 points at end-1388. with preceding year. In 1388, the primary market index went Tehran Stock Exchange Dividend and up by 61.9 percent to 10,336.5 points Price Index (TEDPIX) compared with the respective figure of last year. The secondary market index rose by Tehran Stock Exchange Dividend and 41.0 percent from 12,563.5 points in 1387 Price Index (TEDPIX) picked up by 58.8 year-end to 17,710.4 points at end-1388. Market Capitalization, Turnover Ratio, and 1, 2 Ratio of Shares Traded to Shares Issued (billion rials) Market capitalization Market capitalization Turnover ratio Ratio of shares traded Value of trading 3 3 (year-end) (average) (percent) to shares issued 1387 448,954.9 137,117.5 455,530.1 30.1 23.4 (-2.8) (88.3) (6.3) 1388 651,428.3 184,166.2 550,191.6 33.5 29.8 (45.1) (34.3) (20.8) 1 2 Source: TSE Excluding companies listed on the unofficial board and trading of participation papers Figures in 3 parentheses indicate percentage change over the previous year. The turnover ratio and the ratio of shares traded to shares issued are based on the market capitalization average at the beginning and the end of the period. 1 On the last active day of the TSE in 1388, dollar was exchanged at a rate of Rls. 9,834. 153 Chapter 17 CAPITAL MARKET TSE Indices (1369=100) Year-end Percentage change 1386 1387 1388 1387 1388 Dividend and Price Index 36,193.1 32,117.3 51,006.0 -11.3 58.8 Price index 10,081.9 7,966.5 12,536.7 -21.0 57.4 Free float adjusted index .. 9,657.0 15,818.9 63.8 Financial index 20,882.5 20,552.8 33,641.6 -1.6 63.7 Industrial index 7,966.9 6,172.6 9,629.5 -22.5 56.0 Primary market index 9,016.0 6,383.7 10,336.5 -29.2 61.9 Secondary market index 11,046.3 12,563.5 17,710.4 13.7 41.0 Top 50 performers index 559.2 291.1 549.2 -47.9 88.7 Source: Securities and Exchange Organization, and the TSE Figure 17.3. TSE monthly indices Law and the Law for Implementation of General Policies of Article 44 of the Consti- price index tution reiterated on the continuation of the financial index Justice Plan.