Mohammad-Ali Dehqan Dehnavi made the remarks in a ceremony for signing a memorandum of understanding on cooperation between SEO and the Ministry of Industry, Mining and Trade aimed at financing the production activities through the micro capitals of the people, with emphasis on strengthening the country’s production resources as a capital market priority.

The official said: “Efforts have been made to use all the capacities and facilities of the capital market to boost production, because we believe that the final benefit of this support will return to the capital market.”

New methods of financing should be introduced and new ideas such as crowdfunding should be considered alongside the previous methods, he added.

Elaborating on crowdfunding, the SEO head said that it is a platform and base for connecting micro-savers to small and medium-sized producers, which in fact can be a manifestation of people’s inclusive participation in the economy.

At the end, the official emphasized, “With the special support of the Ministry of Industry, Mining, and Trade from the production companies listed on the stock exchange, we will undoubtedly witness the further improvement of the country’s industrial development indicators.”

Materializing motto of year

Making these remarks by the head of Securities and Exchange Organization clearly indicates that this organization is determined to support domestic production in the present Iranian calendar year (began on March 21), which is named the year of “Production: support and the elimination of obstacles”.

In fact, the SEO considers itself a serious supporter of this motto, as the two keywords of “Production” and “Capital” together consist the base for the national development, and each step to facilitate production will be resulted in expediting the country’s movement toward development.

According to the organization’s head, the capital market, with its inherent potential in the field of financial exchanges, organizing parallel markets, and creating balance in the economic system, pursues the mission of supporting production; and in spite of all domestic restrictions and international sanctions, prevents production stop through leading the liquidity toward productive enterprises.

“Without the safe “supports”, production is usually slow, so the capital market seeks to provide a safe and secure environment for those active in the production sector by constantly injecting liquidity and designing support institutions such as financing companies and planning to avoid wasting resources in unproductive sectors”, the official has stated.

SEO’s main strategies to support production

The SEO head has also expounded upon this organization’s main strategies to support the motto of this year, which is supporting production and eliminating related obstacles, as follows:

Supporting knowledge-based companies along with strengthening the traditional market is one of the tasks that the slogan of the year implies, and any move that shortens the path of producers and consumers depends on the strong support of related organizations, which should have more overlap this year.

Removing obstacles in the path of development is one of the inherent tasks of organizations, and in this regard, the SEO will put the acceleration and simplification of the licensing process at the top of its policies.

Encouraging investors to have a wider presence in the capital market is possible only by removing unnecessary regulations and administrative barriers.

The capital market will emerge as one of the most serious supporters of this year’s motto with strong strategy, identification of obstacles, and offering solutions and operational action to eliminate them.

The SEO hopes to materialize this motto through adhering to the principles of strengthening professional supervision, continuing to improve public confidence, and trying to achieve the goal of “economic development” by relying on the strength of all capital market beneficiaries, including shareholders, investors, financial institutions, publishers, experts and media.

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The fall in oil prices and the reimposition of the U.S. unilateral sanctions on Iran’s economy led the Iranian government to turn to the capital market for funding.

On one hand, the government tried to prevent liquidity from going to the markets such as gold and foreign currency, and on the other hand, considering the recent events in the Iranian economy, it also looks at this market with a view of financing, which resulted in the prosperity of this market.

The rising rate of inflation and also that of foreign currency exchange have been also mentioned as two major factors led to the flourishment of the capital market.

In addition to inflation, which has been one of the main drivers of capital market growth in the past two years, another market driver is changing the attitude of government officials towards the capital market and trying to transfer the shares of 18 large state-owned companies through exchange-traded funds (ETFs).

 Establishment of ETFs

In May, 2020, the government sold shares in three banks and two insurance companies via the first exchange-traded fund (dubbed Dara First).

Dara First, listed on Tehran Stock Exchange, which is Iran’s major stock exchange, was the first fund from a series of three ETFs, through them shares of some state-owned organizations and companies are planned to be offered.

The shares to be offered via the mentioned Iranian ETFs belong to those governmental bodies defined in Iran’s privatization program, a comprehensive plan seriously followed up by the government to downsize and reduce its role in the economy.

The second ETF (dubbed First Refinery, or Dara Second), which holds government shares in four major oil refining companies, was offered on August 26.

The government also plans to divest shares in giant auto and metal companies through a third ETF (dubbed Dara Third).

More initial public offerings

In line with the thriving status of the capital market, TSE held more initial public offerings (IPOs), some of them were related to some major entities.

On April 15, Iran’s stock market witnessed its largest-ever initial public offering, as Social Security Investment Company (SSIC, also known by its Persian acronym Shasta) offered eight billion shares, which account for 10 percent of its stakes, for sales in Tehran Stock Exchange.

In fact, the market is trying to attract the liquidity existing in the society toward production and development projects, so, many ministries and organizations including the Ministry of Transport and Urban Development announced that they are planning to fund their development projects through the stock market.

Public knowledge of capital market improved

While some economic factors such as reduced banking interest rate, and less profit-making status of the parallel markets including the markets of gold coin, forex, and housing led people to make investment in the capital market, their improved knowledge of this market was also a prominent factor contributing to the capital market’s flourishment.

Securities and Exchange Organization (SEO) have been taking some major steps in this regard to make people acquainted with the capital market and investment making in this market.

On Wednesday, SEO Head Mohammad-Ali Dehqan Dehnavi said that the capital market has witnessed many changes in the last two years, and in terms of size, volume of activity and presence of people, there has been a significant growth and these rapid changes have changed some equations.

The official also announced that the SEO’s Advisory Council has proposed two new programs for supporting the stock market in the current Iranian calendar year (started on March 21).

The mentioned programs dubbed “capital market policy package to support production and eliminate obstacles” and “the plan to improve the position and performance of the capital market” are supposed to expand investment making in the stock market, which can lead to the economic prosperity of society, through controlling liquidity, and even the optimal use of micro-savings.

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As reported, IFX touched a new record high in the past year, as it gained more than 100% to stand at 2,258 points on March 19, 2019.

The number and worth of trades at IFB increased 89 percent and 71 percent, respectively, in the past year compared to its preceding year.

Monthly average value of trades at the First and Second markets of Iran Fara Bourse amounted to 287.622 billion rials (about $6.8 million) and worth of trades at the Base Market accounted for 170.418 billion rials (about $4.05 million). This year total volume of trades at the First, Second and Base markets (i.e. IFB stock market) reached 165,586 million shares; all witnessed an increase of 75 percent-191 percent.

Meanwhile, as Shapour Mohammadi, the head of Iran’s Securities and Exchange Organization (SEO), has previously announced the value of trades at Tehran Stock Exchange (TSE) and IFB rose 80 percent during the past year.

Making the remarks in the inaugural ceremony of 12th International Exhibition of Exchange, Banks and Insurance of Iran (IRAN FINEX 2019), which was held at Tehran Permanent International Fairgrounds last week, the official referred to 80 percent growth of financing in the country’s capital market during the past year, and noted that it indicates the good status of this market.

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