jul 2020 - seo

Jul 2020

Contents

Stock Market Indices .................................................................................................... 3

TSE and IFB Market Capitalization ................................................................................ 4

Industries Market Capitalization .................................................................................. 5

Exchanges' Trading Statistics ........................................................................................ 6

Instruments' Trading Statistics ..................................................................................... 7

Share of Institutional and Individual Investors in Trading Value ................................. 8

Institutional and Individual Transactions ..................................................................... 8

Sukuk ............................................................................................................................. 9

Number of Listed and Unlisted Companies .................................................................. 9

Initial Public Offerings................................................................................................. 10

Abbreviation

IFB Iran Fara Bourse

IFX Iran Fara Bourse Index

IME Iran Mercantile Exchange

IRENEX Iran Energy Exchange

SPS Standard Parallel Salam

TEDPIX Tehran Dividend and Price Index

TRI Total Return Index

TSE Tehran Stock Exchange

Iran Capital Market Insight 3

Stock Market Indices

The end of month figure of Iran stock market major indices including the TSE's (TEDPIX) and

the IFB's total return index (IFX) is compared with that of the previous month in Table 1.

Table 1: Stock Market Indices

Change (%) Jun 2020 Jul 2020 Index

50.8% 1,270,627 1,916,194 TEDPIX

37.8% 14,180 19,544 IFX

The past year's trend of the indices is illustrated in the following figure.

500

2,500

4,500

6,500

8,500

10,500

12,500

14,500

16,500

18,500

20,500

85,000

285,000

485,000

685,000

885,000

1,085,000

1,285,000

1,485,000

1,685,000

1,885,000

2,085,000

2019

/07/

29

2019

/08/

06

2019

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Figure 1: Major Indices

TEDPIX - (Left Axis) IFX - (Right Axis)


In addition, the performance (annual return in percent) of TEDPIX is compared with MSCI

Emerging Market TRI and S&P/OIC COMCEC 50 SHARIAH TRI in figure (2).

MSCI Emerging Market TRI: The index includes securities from 23 countries; however, it excludes stocks from

emerging and frontier economies.

COMCEC: The S&P/OIC COMCEC 50 Shariah is designed to provide investors with a Shariah-compliant

benchmark that measures the performance of leading companies from the Organization of Islamic Cooperation

(OIC) member states.

TSE and IFB Market Capitalization

Share of the IFB and the TSE market capitalization in comparison with the end of June is demonstrated below. The IFB is younger and smaller; yet, has differentiated itself in hosting state-of-the-art financial instruments.

-100%

0%

100%

200%

300%

400%

500%

600%

700%

800%

7/2

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8/3

/201

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Figure 2: TEDPIX, MSCI, COMCEC Annual Returns in a Window

TEDPIX MSCI COMCEC

47,567,388

71,817,862

13,253,907

17,625,296

0 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000

Jun-20

Jul-20

Billion Rials

Figure 3: TSE and IFB Market Capitalization Comparison

Tehran Stock Exchange (TSE) Iran Fara Bourse (IFB)

https://en.wikipedia.org/wiki/Security_(finance)


Industries Market Capitalization

Tehran Stock Exchange and Iran Fara Bourse

The break-down of top industries' market capitalization in the aggregate of the IFB and the

TSE is depicted in the following figure.

Manufacture of chemical products,

19.9%

Manufacture of basic metals , 15.6%

Manufacture of coke, refined petroleum

products and nuclear fuel, 8.2%

Mining of metal ores, 7.7%

Multidisciplinary industrial activities,

7.5%

Banking and financial institutions, 7.3%

Automotive and manufacturing parts,

5.8%

investment firms, 3.2%

Pharmaceutical products, 2.7%

Post and telecommunications,

2.2%

others, 20.0%

FIGURE 4: TOP 10 INDUSTRIES


Exchanges' Trading Statistics The value of trades for each exchange is depicted in the following table.

Table 2: Value of trades for each exchange

Exchange Securities

Trade Value (Billion Rials) Percent change

Jul-20 Jun-20 Jul-19 compared to

previous month

compared to previous year

Tehran Stock Exchange

Stock 3,745,248 1,653,622 234,154 126.49% 1499.48%

Sukuk 8,287 4,539 23,186 82.59% -64.26%

ETFs 114,031 60,917 17,090 87.19% 567.25%

Iran Fara Bourse

Stock 1,368,613 735,220 128,725 86.15% 963.21%

Sukuk 391,565 166,145 39,192 135.68% 899.10%

ETFs 82,419 39,022 12,314 111.21% 569.29%

IME

Physical Market

232,264 175,379 98,900 32.44% 134.85%

ETFs 5997 3655 1,481 64.08% 304.93%

IRENEX

Physical Market

112,182 88,705 13,373 26.47% 738.87%

ETFs 16 0 0 - -

Grand Total 6,060,623 2,927,203 568,415 107.04% 966.23%

Daily Average 263,505 172,188 25,837 53.03% 919.87%

The trading value of each exchange is depicted in the following figures.

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

Bill

ion

Ria

ls

Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20

IRENEX 8,485 44,953 23,661 35,440 91,468 53,804 22,678 58,646 32,018 62,421 88,705 112,198

IME 84,648 103,342 110,054 108,697 136,792 135,364 156,293 144,761 78,898 141,542 179,034 238,261

IFB 181,651 209,414 259,988 169,887 331,607 378,909 496,691 653,190 580,308 1,126,35 940,387 1,842,59

TSE 215,583 368,222 434,315 245,782 431,869 643,464 826,430 960,970 1,018,35 2,492,80 1,719,07 3,867,56

Figure 5: Annual trend of total transaction value by exchanges


Instruments' Trading Statistics

179,034

862

283

105,713

68,455

3,655

238,261

2,238

403

118,740

110,250

5,997

0 50,000 100,000 150,000 200,000 250,000 300,000

Figure 6: IME Trade Value of Different Groups Jul Jun

Billion Rials

88,705

244

0

88,461

112,198

335

16

111,847

0 15,000 30,000 45,000 60,000 75,000 90,000 105,000 120,000

Figure 7: IRENEX Trade Value of Different Groups Jul Jun

Billion Rials

Stock84%

Physical Markets

7%

ETFs3%

Debt 6%

Figure 8: Transactions value by type of securities


Share of Institutional and Individual Investors in Trading Value

Figure 9 reveals the proportion of individual and institutional investors in the total market

trading value of TSE an IFB.

Institutional and Individual Transactions

Institutional and Individual contribution for each category of instruments in TSE and IFB is

demonstrated in the following figure.

26.2%

73.8%

Figure 9: Investors' Proportion in Trade Value of Four Exchanges

Institutional 1,495,660

Billion Rials

Individual 4,220,517

Billion Rials

80.1%

56.2%

2.2%

19.9%

43.8%

97.8%

Stocks ETFs Sukuk

Figure 10: Investors Trading Value of Securities

Share of Individual transactions value Share of Institutional transactions value


Sukuk Outstanding Sukuk The outstanding value of each Islamic securities (Sukuk) is presented in the following figures. It is noteworthy that all instruments in the Iran capital market are Shariah-compliant.

Number of Listed and Unlisted Companies The number of listed and registered companies on the TSE and the IFB are presented in the following table.

Table 3: Number of Listed and Registered Companies on TSE and IFB

Jul 2020

338 Listed Companies in the TSE

129 Listed Companies in the IFB

170 Unlisted Companies in the IFB

Governmental84.2%

Municipal3.1%

Corporative13.1%

Figure 11: Outstanding Value of Each Type of Sukuk Issuers

32.35%

8.09%

0.75%

0.01%5.23%

30.02%

7.52%

16.03%

Figure 12: Outstanding Value of Each Type of Sukuk

Islamic TreasuryBillsGovernmentalIjarah SukukMortgages

Istisna Sukuk

Parallel SalamSukukGovernmentalMurabahah SukukGovernmentalMusharaka GovernmentalManfaat

967,179 980,179

1,160,189 1,247,289

1,366,429 1,389,454 1,468,354

1,562,761 1,617,697 1,632,327

1,721,727

2,008,540

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20

Bill

ion

Ria

ls

Figure 13: Annual trend of Outstanding Value by the nature of the issuer's securities

Governmental Municipal Corporative


Initial Public Offerings The trend of the number of initial public offerings in the TSE and the IFB is presented in the

following figure.

The detail of IPOs in the TSE and the IFB is shown in the following table.

Table 4: detail of IPOs

Offering Date

Percent of Supply

(%)

Trade-Value

(Billion Rials)

No.Shares (Milion)

Ticker Company

Name Industry Exchange

2020/07/01 15% ̴ 25,964 11,000 SITA Tamin

Cement Cement, Lime

& Plaster TSE

2020/07/08 19,8% ̴ 1,268 2,000 LPRS Parsian Leasing

Other financial

intermediaries TSE

2020/07/15 14% ̴ 731 200 RYHZ Rayan

Hamafza

Computer & Related

Activities

IFB - Listed

2020/06/24 30% ̴ 2,448 4,000 PIVZ Pouya

Investment Investment

IFB - Listed

1 1

0 0

1

2

1

2

2

1

2

1

4

3

1

2

1

2

1

4

1

1 1

0

1

2

3

4

5

6

Figure 14: Annual trend of IPO on the TSE and the IFB

TSE IFB-Listed IFB-Unlisted


Close Ties between SEO and Judicial Power of Iran

The SEO and the “Social and Crime Prevention Deputy” of the Judicial Power of Iran inked an

MOU. Under this MOU, the Judicial Power will pursue the establishment of various ad hoc

courts with specialized, approved and well-qualified judges and set up specialized capital

market courts in the required jurisdictions.

One of the important topics considered in the MOU is the detailed study of the capital market

legal structure. Detecting capital market corruption, cooperation in the field of resilient

economy with a view to prevent capital market crime and misconduct, improving the health

of the business environment, specialized training by the Judicial Power for capital market

participants and preventing economic corruption are some of the other topics of this MOU.

SEO Approval on Debt Securities Rating

The SEO Board of Directors has recently issued the latest approval regarding ratings for debt

securities. Based on this approval, issuing debt securities with rating BBB and above, without

a guarantor, shall be done only by the listed issuers of the Tehran Stock Exchange (TSE) or

Iran Fara Bourse (IFB). Issuers shall consider the following points:

The value of the no-guarantor debt securities shall be maximum 60 percent of the average

profit of the last two years, based on the audited annual financial statements of the parent or

consolidated company; whichever the lower. This amount for “Ijara certificates” or “lease

back Ijara certificates” can increase to 80 and 100 percent respectively.

The minimum purchase order for such certificates is 50,000 units (the nominal value for each

unit is IRR 1 million). The offering method is based on book-building.

Flagged symbols for such certificates, filling risk statement by buyers, continuous credit rating

assessment until maturity, requiring the confirmation of collaterals based on the contract

subject to downgrading from BBB level, amending the contracts pertaining to issuing such

certificates to compile a new legal framework compatible to the new condition, and clear

specification of the duties of each unit in case of default are other stipulations for rating of

debt securities.

The credit rating agencies shall comment on the solvency of issuer/founder to retire the

principal and interest of the securities in maturity, considering the financial and liquidity

status.

4th Press Festival

The SEO announced the fourth round of “Press Festival” will be held in August 2020.

Strengthening proper information dissemination to enhance financial literacy, promote

investment culture, and highlight the role of journalists and media are among the objectives

of this festival. The products and news snippets can be in the form of news, reports,

interviews, headlines, or articles on the topic of financial market in Iran.

The deadline for submitting works was July 10, 2020.


Facilitating Listing Process

As from 21 June 2020, there would be changes in the listing process in the Iranian capital

market. Based on the new method, the Exchanges themselves are responsible for listing new

companies / commodities. Previously, any listing proposal would be directed to the SEO. This

is a new decision by the SEO aiming to facilitate the listing process in the Iranian capital

market.

Restructuring of companies, amending and re-consideration of financial statements and

workflow, deleting discrepancies and of course transparency are among the key elements of

speeding up the listing process; companies willing to enter the market shall prepare these

issues before their requests.

Accountability and Transparency: SEO’s Mission

The Chairman of the SEO at a recent press conference stressed the accountability and

transparency as the main mission of the SEO. The SEO as the supervisory authority shall

enforce the pertinent regulations to improve the entire capital market function and

performance.

Mr. Ghalibaf added that media have had a major role in improving capital market

transparency and thanks to the recent considerable attention to the capital market, up-

grading financial literacy and investment culture seems vital. Deeping the market, IT

infrastructure development, financial literacy enhancement, human resources development,

increasing the capital market’s share in financing, domestically and internationally, are among

main goals of the SEO. Although the capital market index has lately had a noticeable growth,

the SEO does its level best to introduce new financial instruments and institutions to make it

even better.

20% Cut in Transaction Fee The BOD of the SEO approved a 20-percent decrease in the transaction fee of the exchanges

and relevant intermediaries. Based on this directive, all four exchanges, CSDI, TSETMC and

Rayan Bourse Co. are obliged to implement the new reduction rate as from 22 July 2020. The

SEO issued this statement aiming to reduce investment costs, encourage capital market

investors and implement protective measures for the rights of investors.

SEO and “Real Estate Registration Organization of Iran (RERO)” sign MOU

The SEO and the Real Estate Registration Organization of Iran (RERO) signed a memorandum

of understanding (MOU) aiming to optimize joint legal commitments, proceedings and

registration via implementing modern IT mechanism. Pointing to over 160 joint activities,

which require RERO’s inquiry, the SEO Chairman said that the MOU undoubtedly facilitates

and speeds up the business processes, converting the traditional and time-consuming model

to an advanced one and omitting red-tape.


Introducing the “joint service desk” and “single window” are among the main articles of the

MOU, not only to speed up the affairs, but also to enhance and win the trust of shareholders

and final beneficiaries.

SEO to Hold the 12th Virtual International Forum on Islamic Capital Market

in September 2020

The Securities and Exchange Organization of Iran (SEO) is to hold the 12th Virtual

International Forum on Islamic Capital Market in September 14-15, 2020. The SEO has

organized this event for 11 years in a row with the support of Islamic Development Bank (IDB),

and Islamic Research and Training Institute (IRTI). Given the outbreak of Corona virus and for

the safety measures of all respected participants, the SEO has decided to hold this Forum

online for the first time. The theme of this Forum is “A Panacea for Emerging Issues”.

The main topics of this ICM are: · Fintech and Islamic Capital Market, · ESG & SRI in Islamic

Capital Market, · Small and Medium-sized Enterprises (SMEs) · Innovation, Regulatory Issues,

and · Efficient Sovereign Sukuk Issuance Models.

The ICM has already gained its momentum over a decade of its history, therefore, a number

of internationally well-known associations and universities have sponsored this event, as

follows: - International Research Center for Islamic Economics and Finance (IRCIEF) of

Malaysia, - Istanbul Zaim University (IZM) of Turkey, - Association of Islamic Finance

Professionals (AIFP) of Kazakhstan, - Islamic Finance News (IFN), as “media partner”; - Imam

Sadiq University of Iran, and - Iranian Association of Islamic Finance.

Tax Aid for Newly Listed Companies

The government of the Islamic Republic of Iran offered tax relieves for the newly listed

companies. Based on the decision, the “State Tax Administration Organization” will consider

the latest financial statement reports of the newly listed companies only; therefore, such

companies may pay their 2019 tax duties.

Meanwhile, these companies are obliged to offer 25 percent of their shares as “floating

shares” in time of listing.

This is the government’s latest decision aiming to deepen the capital market, encouraging

companies to be listed on the securities markets and of course, enhancing tax transparency

of such companies.

More Depth to Capital Market: Minimum 25% Free Float

The Cabinet issued a statement that all subsidiaries, state-owned companies, non-

governmental public entities, pension funds, and all executive bodies of the government work

jointly with the Ministry of Economic Affairs and Finance to increase their minimum free float

to 25 percent. Mr. Ghalibaf Asl, the Chairman of the SEO, stated that this enactment will

further deepen the capital market.

Accordingly, the SEO is obliged to submit a monthly report on the work process to the

Securities and Exchange High Council.


Stating the guarantee of the implementation of this decree, Mr. Ghalibaf Asl pointed that the

“Planning and Budget Organization” is obliged to set a 5% monthly reduction in the budget

allocation of the companies that do not comply with the report of the SEO. Furthermore,

“Iranian Privatization Organization” is also obliged that, if the involved companies and

institutions fail to publicly offer their shares, this organization will directly sell the shares

according to the market conditions and submit the report to the SEO.

Executive Regulations for Justice Shares

Securities and High Council approved the executive regulation for releasing Justice Shares. According to this regulation, legal processes related to the capital raise of provincial

investment companies for “Justice Shares” have been determined. Such provincial

investment companies are obliged to cooperate closely with the "Central Securities

Depository of Iran (CSDI)" and the "Real Estate Registration Organization of Iran" to take the

necessary measures to raise capital and get listed on one of the equity exchanges, i.e. Tehran

Stock Exchange (TSE) or Iran Fara Bourse (IFB). According to this regulation, the holders of “Justice Shares”, after obtaining the SEJAM code,

can apply to one of the brokerage companies licensed by the SEO to buy or sell their shares

up to the specified limit.

Fifth Exchange in Iran

Securities and Exchange High Council announced the establishment of the fifth Exchange in

Iran. The "Real Estate Exchange of Iran" will be introduced in the near future.

“In addition to assisting the real estate sector, this new Exchange will cover a wide range of

assets that are not tradable and cannot be financed in other existing exchanges.” said Mr.

Ghalibaf Asl, Chairman of SEO.

There will be three sets of stockholders in this newly-established Exchange: 35% will be

offered to private and cooperative sector, 35% to public governmental and non-

governmental institutions that own most of the country’s lands and the remaining 30% will

be offered to individuals upon underwriting. The SEO is obliged to make the necessary

arrangements to finalize the grounds for the establishment of this Exchange within the next

four months.


At the end of Jul 2020, the market

capitalization reached 89,443,158 billion IR,

which represents 47% growth compare with

the previous month .

The TSE's total return index (TEDPIX) at the

end of one-month trading session in July 2020

increased by 50.81% and touched 1,916,194,

while the IFB's total return index (IFX) reached

19,544, which demonstrates a 37.8% growth.

The total trading value of four exchanges (TSE,

IFB, IME, and IRENEX) amounted to 6,060,623

Billion IRR in July 2020, which shows 107.04%

Increase comparing to the last month.

jul 2020 - seo

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