TEHRAN (Iran News) Active and influential symbols in the market can be described as follows: the recent flow of liquidity has been concentrated in certain industries and specific symbols.

Index-making symbols such as Foolad and Fmeli have had the most positive impact on the index in recent days. This group benefits from rising global metal prices and exports.

Similarly, index-making energy symbols such as Shapran, Shapna, and Shebandar have also been influential, as these stocks are consistently attractive due to their value and profitability and remain among the market’s most highly traded and liquid stocks.

Following metals and oil, the banking and investment sectors gained attention. Index-making symbols such as Vebmellat, Shasta, and Ghadir drew significant interest. Vebmellat has been one of the most heavily traded banking symbols in recent days. Large investment companies like Shasta and Ghadir are also key market players.

After the banks, the automotive sector stood out. Index-making stocks such as Khodro and Datsra also accounted for high trading volumes in recent days.

But in a “neither war nor peace” situation, why has the capital market gained such momentum, and why is capital flowing into this market from many other sectors?

Almost all political-economy experts summarize the main reasons for the market’s current appeal in the following factors:

High liquidity (marketability): In unstable conditions, investors look for markets where they can enter and exit quickly. Compared to real estate or automobiles, the stock market offers higher liquidity.

Inflation and depreciation of the national currency: In such conditions, people turn to the stock market or other assets to preserve the value of their capital and protect their purchasing power.

Inflation expectations and rising prices: If market participants anticipate higher prices for goods or raw materials, they tend to buy shares of manufacturing or export-oriented companies to hedge against inflation.

Government policies to manage the crisis: Governments may support the capital market through measures such as injecting liquidity or lowering interest rates, which can attract investors.

Profitability of certain companies in special conditions: Some industries (such as metals, petrochemicals, and raw materials) may become more profitable during sanctions or geopolitical tensions, increasing demand for their shares.

The stock market’s relative attractiveness compared to other markets: If parallel markets like currency, gold, or housing lose their appeal due to government controls or other factors, the stock market becomes a more attractive alternative.

However, it must be noted that this positive trend may be driven by excitement and could involve significant volatility and risk, as a “neither war nor peace” environment is inherently unpredictable and subject to sudden change.

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Speaking in a presser, Khandouzi said that some rumors on the government’s decisions do not come true and the government has tried to make ineffective the impact of rumors but admitted that recent unrests in the country increases this negative outlook on the economy.

He noted that in recent months the growth in the production industries has improved from negative 5.8% to positive 6.7%.

He added that agriculture is in better situation now despite negative economic growth in the sector.

He said: “Although the economic growth of agriculture sector is negative, we are in a better situation compared to what it used to be.”

He further added that the monthly inflation of this sector has also decreased.

He also stated: “In recent months, there was an inappropriate trend in the growth of the country’s large industries. The growth of these industries have now improved and reached plus 6.7 percent. The largest increase in production is related to the automotive parts industry.”

Speaking about the formation of the inflation monitoring committee, Iranian Economic Affairs and Finance Minister stressed: “Controlling inflation is the government’s priority in the country because we had 4 years of inflation and that is why the existence of this committee is the right thing.”

Khandouzi stated: “President Raisi will be also provided with a report in this regard on a weekly basis.”

He went on to say: “The stability and prospects of the capital market have always been important for the government.”

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The decision was made during a meeting between the CBI Governor Ali Saleh-Abadi, the Finance and Economic Affairs Minister Ehsan Khandouzi, and the SEO Head Majid Eshqi.

Speaking at the meeting, Saleh-Abadi said that the formation of a joint committee will help develop joint cooperation in money and capital markets and stabilize them while creating new capacities for growth because money and stock markets are not competitors but complementary.

He also pointed to the need to establish a financial stability council and said: “By establishing this council, coordination between various components of the financial market, especially the money and stock markets in the country can be improved; The current situation is a very good time to establish this council and to promote such cooperation.”

Stating that the capital market is a specialized market, Saleh-Abadi stressed that the capital market should continue its growth path away from politicization and in a predictable environment based on specialized approaches.

Further in the meeting, Khandouzi stated that having dialogue among economic policy-making institutions is very promising, saying: “This can lead to good results and, if it continues, will have a very clear meaning for traders and the market.”

He also welcomed the establishment of a joint committee with the CBI and noted that the cooperation with the central bank in such joint committees, will help to clarify the key variables that traders will look at to make decisions in the market.

“If the Joint Committee meets regularly on a weekly basis, small issues can be resolved quickly and serve as a basis for dialogue, increased understanding and cooperation with other productive sectors of the economy, as well as other ministries,” Khandouzi stressed.

Eshqi for his turn underlined stability as the most important component in the capital market and said: “The most important factor that raises concerns in the capital market is instability, even though the macro variables of the capital market are desirable. Nevertheless, I hope that with the efforts made by the CBI, the common language between the two markets will improve.”

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Mostafa Safari believes that reaching a possible agreement on the nuclear deal will have a positive impact on the capital market and pave the way for significant growth in the market.

“Reaching such an agreement will result in the reduction of the costs in major companies and will certainly have a positive impact on the market as a whole, especially on the shares of export-oriented companies,” Safari told IRNA on Sunday.

“Reducing costs will eventually increase the profits of corporate stocks; Therefore, we hope that the lifting of sanctions will be implemented as soon as possible so that we can see the positive impact of this event in the market,” the analyst added.

Safari further mentioned the support programs carried out by the government as another positive factor that has impacted the trades in the stock market, saying that such measures have ensured the growth of the market in the future.

He mentioned the upward trend of the market over the past two months and noted: “despite the fact that the market has always experienced some decline in the last two months of summer, this summer the positive news over the nuclear deals and the prospects of lifting the sanctions pushed the marked up.”

Following the supportive measures taken by the government, the Iranian stock market has been gradually getting back on track and experts believe that the market is regaining people’s trust.

Earlier this month, Market Expert Reza Alavi said that the inflow of liquidity into the market and the increase in the value of transactions indicate that people are once again trusting the capital market.

“At present, other markets such as gold, foreign currency, and cars are not attractive enough for investors, and the stock market is still a good place for people’s investments,” Alavi told IRIB.

“After the election debates, people have come to the conclusion that the stock market is one of the priorities of the new government, and for this reason, they have re-trusted this market, and as a result, the inflow of new capital into the market has increased,” he said.

He further mentioned the rise in the global oil prices and the stability of the foreign currency exchange market as factors that resulted in the stability of the stock market.

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IRAN NEWS ECONOMIC DESK

TEHRAN – Head of Iran’s Securities and Exchange Organization (SEO) says currently about 14 percent of people in the country are involved in the stock market trade, as investment in the stock market  in a span of three to five years is more profitable than investment in the gold and forex markets.

Speaking to Fars News Agency and when was asked how the ground can be prepared for presences of majority of the people in the stock market, Shahpour Mohammadi said country should work on investment funds because people are eager to be present in the capital market but first indirect tools like investment funds should be equipped more.

Mohammadi added that the idea of investment in the capital and stock market should be taught in schools and universities because it is a daily job and people have to know all skills of investing in capital market before entering it.

He also said that all supportive laws about the current companies in the capital market should be changed, adding that all issues about one listed company in the stock market are transparent but they may also have some defects but the company is in better condition comparing to other companies.

Mohammadi added that all should work together to bring discipline and transparency to all segments of the economy and the government should levy heavy taxes on those economic activities which disrupt the economy like hoarding.

He noted that to support production and companies in the stock market which are almost production units, the government should levy heavy taxes on those who invest in the gold and forex taxes or hoard vehicles, real estate property and apartment  and this move will strengthen production companies and the stock market.

He added that currently some 11.2m people have codes for trading in the market and it is almost 14 percent of the total population while India with population over some 1.3b has only 25m codes for its people for trade in the stock market.

On the recent growth in the stock market index despite the existing economic condition, he said that the SEO as a supervising body cannot talk about the trend in the market but something is important that if people want to purchase shares, they should only not think about the total index in the market and they should only focus on the index on the certain company that they want to investment on it.

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Nevertheless, the capital market has achieved to be the second source for allocating funds at the macro-economic level through facilitating rules and regulations and issuing binding bonds and percentage stocks over the past decade. Unfortunately, the agricultural sector has not been able to grasp the concept of “from bean to the shelf” due to a lack of supportive infrastructural facilities, efficient capital raising corporations and financial know-how.

Out of the 326 Iranian corporations that are active in the stock exchange market, only a few are upstream and downstream agricultural companies.

Currently, the agricultural sector has access to the Islamic financial tools, including partnership, bailment of capital, contract for the agricultural purpose and percentage, debt and renting. These tools could provide a great opportunity for the public and private sector, including the mangers of the agricultural supply chain, investors and the Ministry of Agricultural Jihad. Regrettably, from among the contracts, only Mozarebeh (bailment of capital) and renting have been extensively used by Iranian banks. The interesting point is that the extensive use of the abovementioned Islamic financial tools will lead to the fair distribution of the risks involved in the agricultural sector among different stakeholders, including farmers and shareholders. Therefore, the income will be fairly balanced between different deciles of the agricultural chain. The policymakers of the financial sectors should shift their focus from the banking system toward the stock exchange market. In such a system, the shareholders can enjoy the interest of their share, while being able to reap benefits from rises in the value of the products and crops. However, this system should be supported by policymakers, credit institutions, and public and private organizations. Allocating an insufficient budget for the agricultural sector within an efficient banking system should raise the alarm for the managers. Crises such as agricultural overproduction – in Iran pertaining to crops including tomato, cucumber, garlic, and saffron – can be resolved solely by activating supporting mechanisms, like the in-time guaranteed purchase of the products at supportive prices. Nowadays, the crisis of agricultural overproduction has hit other crops in Iran as well. Thus the banking system alone cannot play an effective role. The financial indicators, like yield and risk indices, should be pre-calculated and used by these systems to control the agricultural overproduction. Gaining acceptable marginal benefits from business in the agricultural sector requires the adoption of appropriate policies that support the agricultural value chain, along with stock issuance and applying domesticated patterns of contract farming.

What experienced by the Central Organization for Rural Cooperatives of Iran (CORC) in 2018 and 2019 is proof that the banking system alone fails to be sufficient for resolving the financial problems besetting the agricultural sector. Mobilizing different financial resources and using available tools to issue stock and bonds in the stock exchange market will surely pave the way for sustainable fundraising in the agricultural sector.

* H. Shirzad is the deputy agricultural Jihad minister and the CEO of the Central Organization for Rural Cooperatives of Iran (CORC).

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IRAN NEWS ECONOMIC DESK

He then pointed to the process of forming a jurisprudence committee in Iran’s capital market, adding that the committee started its job in 2007 and since then, it is monitoring all activities of Iran’s stock exchanges, and financial tools without the approval of the committee are not allowed to be used. He went on to say that Securities Exchange Organization does its best to take into consideration all jurisprudence issues in the capital market.

Mohammadi reiterated that all process of a trade from the start to its end are monitored by the committee and in case something vague and ambiguous happens in the trade, all refer to the decisions of the committee.

He reiterated all diverse financial tools in Iran’s capital market like sukuk and other bonds are based on sharia and they have been adjusted with other financial tools in the world.

Mohammadi went on to say that the number of joint funds for investment has reached 211 and stocks of more than 600 companies are traded in the stock market.

Meanwhile he reiterated that the national capital market is in favorable condition and the market has enjoyed  a good stability in recent months.

He added that some forums and meetings like the current one can help those who are involved in the capital markets in the Islamic countries invest in Iran.

On the joint financial markets among countries, Mohammadi said issue of joint market is actually pursued through negotiations between Iran with other stock markets like Istanbul and those companies which are active in Iran’s stock market are shown at Istanbul Stock Market and those companies which are active in Istanbul stock market are shown in Iran’s stock market.

The two-day forum which is underway in Tehran will wrap up in Tehran today.  28 foreign guests from 15 countries have attended the forum. Guests from Italy, Spain, Qatar and Morocco have participated in the forum for the first time. This year’s event is aimed at developing the Islamic financial tools.

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On the same day, IFX, the main index of Iran’s over-the-counter (OTC) market, known also as Iran Fara Bourse (IFB), gained 34.32 points or 1.94% to close Saturday trade at 1,805.58. About 1.52 billion securities valued at $72.39 million were traded at the over-the-counter exchange for the day.

Share trading on Wednesday started with a bang, as TSE made a 6,000-point jump in the first hour of the trading day alone, exceeding 155,000 points by the end of the day to register a historic high. By the end of the trading day, TEDPIX had gained 6,483.46 points or 4.36% to end trading at 155,061.1. IFX ended up 75.28 points or 4.44% to close at 1,771.25 on that day.

The rising trend of TEDPIX began on June 13, which was named ‘Golden Wednesday of Stock Market’, when TEDPIX gained 2,767 points to stand at 99.146 points. Then on June 17, players in Iran’s capital market witnessed a historic record in growth of TEDPIX which gained 3,306 points to hit 102,452 points, something unprecedented in the 50-year history of the country’s stock market.

Capital market indices have generally experienced a positive trend since then.

This happened under the conditions that domestic markets are awaiting the new wave of U.S.-led sanctions in November, following being hit by the first round of sanctions posed in early August.

According to the Central Bank of Iran’s latest data, liquidity stood at 16.02 quadrillion rials (about $381.4 billion) during the fourth month of the current Iranian calendar year, Tir, (June 22- July 22), which shows 20.1 percent growth in comparison with the same period in the preceding year.

Meanwhile, the Statistical Center of Iran announced that the inflation rate in the twelve-month period ended on the last day of the fifth Iranian calendar month, Mordad, (August 22) stood at 9.7 percent, showing one percent rise on month. Although many believe the rate is much higher than the announced figure.

Although Iran’s economy is experiencing a series of problems including stagnation, high inflation and unemployment rates, but capital market indices open in green and hit record high.

The growth can be explained regarding the dominant recession on other domestic markets, which has guided a big sum of liquidity from other markets such as auto, foreign currency, housing and coin to the capital market.

The government’s recent focus on supporting and expanding the capital market, can also explain the recent jump in indices.

The low tax rate, liquidity transparency, and other provided instruments by the government has presently given the investors in the capital market the confidence about low liquidity risk in the stock market and has led to attraction of a large volume of capital and expansion of trade and cooperation among private companies.

Export-oriented companies such as petrochemical, steel and mining companies whose products are priced at higher rates at the capital market, can presently benefit from higher profit margin in comparison with other companies and their presence in the stock exchange market can boost domestic production and job creation.

In case the required infrastructure in the capital market is improved, higher growth and more trades are predictable in the capital market but the growth makes some concerned since it is merely witnessed in the capital market but not in other ones.

Some express concern that due to the leading recession on economy, existing inflation, the unclear future of the nuclear deal, known as JCPOA, which has a high impact on domestic markets including the capital market, the experienced upward trend and record breaking of the capital market indices should not be considered as an ongoing one in the long-run.

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