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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Over 7.187 billion securities worth 58.295 trillion rials (about $1.387 billion) were traded at the TSE on Wednesday.

The first market’s index rose 4,568 points, and the second market’s index increased 22,590 points.

Mohammad-Ali Dehqan Dehnavi, the head of Iran’s Securities and Exchange Organization (SEO), has announced that the organization’s advisory council has proposed two new programs for supporting the stock market in the current Iranian calendar year (started on March 21).

The details of 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” were presented in a meeting between Dehqan Dehnavi and the members of the SEO Advisory Council.

“The capital market has witnessed great changes in the past two years and has grown significantly in terms of size, the volume of activity, and presence of people. These rapid developments have changed some of the equations [in the market],” Dehnavi said following the mentioned meeting.

He emphasized that the structure and facilities of the stock market should be reviewed and modified based on the size and volume of today’s market and the issues it faces.

“New capacities should be created not only in the structure of the stock exchange organization [SEO] but also in all sectors of the market in order to adequately respond to the existing needs,” the official said.

According to the official, the first of the above-mentioned programs, namely “capital market policy package to support production and eliminate obstacles” has been prepared by the SEO Research Center to tackle the issues that the stock market is facing in supporting domestic production.

“It provides solutions to more than 40 to 50 capital market challenges and issues in this regard,” he noted.

In the second program, the necessity and ways of improving the position and performance of the capital market are discussed and the raised issues and problems will be addressed through specialized working groups with the presence of experts, analysts, capital market activists and managers from different sectors.

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The index closed at 1.213 million points on Wednesday (the last working day of the week).

TEDPIX returned to the uptrend after a long period of fluctuation and continuation of the downward trend

During the past week, the indices of Iran Khodro Company, Saipa Company, Esfahan Oil Refining Company, Kourosh Food Industry Company, and Zarmakarun Industrial Company were the most widely followed indices.

Over the past two years, a number of factors affecting Iranian economy have created a new status in the country’s capital market, in a way that this market experienced such a growth in the past Iranian calendar year 1399 (ended on March 20) that was never seen in its history of more than 50 years.

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).

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According to the TSE office of Public Relations and International Affairs, the decision was announced during the 32nd meeting of FEAS General Assembly which was held online on Tuesday due to the restrictions over the coronavirus pandemic.

As reported, at this meeting, financial statements for the fiscal year 2020 were approved and the yearlong performance of the FEAS secretariat and committees were reviewed. The roadmap for 2021 was also evaluated by board members.

At the end of the meeting, the attendees voted to select the members of FEAS Board of Directors for a two-year term, and the stock exchanges of Egypt, Kazakhstan, Athens, Sydney, Amman, Muscat, Tehran, Armenia, and Iraq were selected as the main members and Egypt and the European Bank for Reconstruction and Development were selected affiliates.

It should be noted that Iran Fara Bourse, stock exchanges of Cyprus, Tashkent, and Palestine along with Armenian Deposits were also selected as members of the Board of Directors of FEAS Audit Committee for two years.

TSE had been elected as the main member of the FEAS Board of Directors in the previous election which took place in 2018.

The Tehran Stock Exchange is Iran’s largest stock exchange, which first opened in 1967.

TSE, which is one of the founders of the Federation of Euro-Asian Stock Exchanges, has been one of the world’s best performing stock exchanges in recent years.

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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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The details of 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” were presented in a meeting between Dehqan Dehnavi and the members of the SEO Advisory Council.

“The capital market has witnessed great changes in the past two years and has grown significantly in terms of size, the volume of activity, and presence of people. These rapid developments have changed some of the equations [in the market],” Dehnavi said following the mentioned meeting.

He emphasized that the structure and facilities of the stock market should be reviewed and modified based on the size and volume of today’s market and the issues it faces.

“New capacities should be created not only in the structure of the stock exchange organization [SEO] but also in all sectors of the market in order to adequately respond to the existing needs,” the official said.

According to the official, the first of the above-mentioned programs, namely “capital market policy package to support production and eliminate obstacles” has been prepared by the SEO Research Center to tackle the issues that the stock market is facing in supporting domestic production.

“It provides solutions to more than 40 to 50 capital market challenges and issues in this regard,” he noted.

In the second program, the necessity and ways of improving the position and performance of the capital market are discussed and the raised issues and problems will be addressed through specialized working groups with the presence of experts, analysts, capital market activists and managers from different sectors.

Unprecedented fluctuations in the Iranian stock market over the past few months have raised concerns among shareholders, experts, and scholars leading them to call for the government to increase support for the market.

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As IRNA reported, revising the regulations regarding the public float stock, determining ceiling and limitation for the Initial Public Offerings (IPOs), and finally establishing a support fund for certain stocks were the solutions that Balazadeh has proposed.

According to Balazadeh, one of the problems that can be quickly addressed in the current situation is the issue of float stock. Based on the capital market law, companies in this market must offer at least 10 percent of their shares to public investors. In recent years, the increase in companies’ capital from revaluation has made them bigger and following this growth most companies need more liquidity to back them up.

So, the regulations in this regard must change in a way to oblige such companies to offer more of their shares in the market.

Secondly, the analyst offered that for those companies who are going to offer their shares for the first time, a ceiling must be set for the price of the shares and if they exceed the set criteria and the stock falls in the future the owner company should be obliged to refund the shareholders paid money.

Regarding the support fund, Balazadeh said this fund can be set up with a part of the dividend of the companies in the general assembly and with the agreement of the shareholders. This way, shareholders can agree to allocate a portion of their dividend to the mentioned fund to support the stock when needed.

According to the official, the development of the stock market and inviting people to bring their assets into this market required the preparation of infrastructure. But the government encouraged people to participate in this market before the infrastructure was ready and that caused the current problems.

He said last year the market was not ready to absorb the huge amount of liquidity that was flown into it.

“When a market is to be developed, the base and infrastructure must be developed in the first step,” he stressed.

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Speaking in the SEO’s second industry expert desk on Sunday, Mohammad-Ali Dehqan Dehnavi said: “In recent years, the capital market has found a special place in the country’s economy due to the large presence of shareholders. The significance of the capital market is such that today even in political issues, such as presidential election, a large volume of content is related to the stock market, and this shows the important position of this market in the country.”

SEO has started a program for establishing industry expert desks in which the challenges, issues, and needs of various industrial sectors are discussed separately and solutions are presented to overcome them.

The first desk of the SEO, held in mid-May, was focused on the refining industry, while the second desk has been dedicated to the mining industry with a special focus on cement production units.

Speaking in this meeting, Dehnavi pointed to the goals of establishing the mentioned desks, saying: “This desk has a consulting role in the first step and will examine various issues, challenges, and problems of various industries through the interaction of different elements of the capital market and industry.”

These desks can be attended by all producers, relevant associations, scientific and research bodies, and financial institutions, he stressed.

“The opinions of policy-making institutions such as the Ministry of Industry, Mining and Trade, the Research Center of the Iranian Parliament, and members of parliament can also be used in these meetings,” the official added.

The meetings should lead to the preparation and formulation of specific solutions to solve problems and to determine what laws and regulations are needed to address the existing challenges, so that ultimately, by addressing these challenges and consequently the growth and development of the industry, the capital market could also benefit, Dehnavi stated.

Earlier on May 17, the official had mentioned forming expert desks as a productive way for discussing and resolving the issues of various industrial sectors and noted that SEO is seeking to establish expert desks for all the industrial sectors active in the stock market.

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Speaking in an online meeting with the heads of the country’s major companies active in the mentioned industry on Sunday, Mohammad-Ali Dehqan Dehnavi said the stock market can provide solutions to finance petrochemical companies and increase investment in this area.

He mentioned forming expert desks as a productive way for discussing and resolving the issues of various industrial sectors and noted that SEO is seeking to establish expert desks for all the industrial sectors active in the stock market.

He pointed to the holding of the first meeting of the industry desk in SEO and added that in this meeting, which was dedicated to review the issues of the refining industry, the existing problems, obstacles, and challenges in this area were addressed and some solutions were proposed.

Dehnavi said that the refining industry accounts for an important part of the capital market and added: “We must use the capital market as a platform to finance projects in this industry and increase investment.”

“We believe that the capacities of the capital market can be put alongside the potentials of the industrial sectors to facilitate development of those sectors,” he stressed.

The official further noted that policies and regulations affect the value of people’s assets in the capital market and the legislators should not make decisions without considering the interests of small shareholders.

Increasing the capital of companies, issuing bonds, forming funds for special projects are some of the ways through which the capital market can help finance projects in various industrial sectors, Dehnavi said.

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Rouzbeh Shariati believes reaching a possible agreement on the nuclear deal, the stability of the national currency, as well as the less attractive situation of the parallel markets are the important factors that would contribute to the improvement of the capital market.

“Prospects of a political agreement and positive signals from Vienna have reduced the foreign currency exchange rates in the domestic market. The stock market, however, had already anticipated this agreement. In fact, the anticipation of the agreement has already caused the correction of prices in the capital market,” the analyst said.

Unprecedented fluctuations in the Iranian stock market over the past few months have led shareholders, experts, and scholars to call for the government to increase its support for the market, some shareholders want the government to guarantee the return of their stocks, some believe providing infrastructure is the best way to help this market.

Following the rising concerns over the market conditions, in early April, the Government Economic Coordination Headquarters, in its 216th meeting, approved some new directives for regulating the stock market.

Also in late April, senior officials including the parliament speaker Mohammad Baqer Qalibaf, the Governor of the Central Bank of Iran (CBI) Abdolnaser Hemmati, Finance, and Economic Affairs Minister Farhad Dejpasand, and the Head of Iran’s Securities and Exchange Organization (SEO) Mohammad-Ali Dehqan Dehnavi gathered at the country’s parliament to explore ways for supporting the stock market and resolving its current issues.

After the mentioned meetings, SEO unveiled a new directive package dubbed “7+3” which include allocation of one percent of the National Development Fund (NDF) resources to the stock market stabilization fund, lifting the ban on capital market financial institutions to use banking facilities, and granting five-year residency to foreign investors who buy shares in the Iranian capital market.

The above-mentioned directives have been implemented in the capital market as of April 27th, according to Dehqan Dehnavi.

In the 216th meeting of the Government Economic Coordination Headquarters, President Hassan Rouhani presented a report on the government’s supportive measures for the stock market, saying: “This year, which has been named the year of supporting production and eliminating obstacles, the government is trying to remove obstacles to the growth of the capital market and will try to encourage people to enter this market with the necessary training and arrangements.”

In its latest supportive decision, the government has also approved to inject 240 trillion rials (about $5.7 billion) of resources into the market in the form of bonds which most experts evaluate as a positive measure. It is said that these funds are gradually injected into the market and help increase the liquidity until new resources enter the market.

It has been said that these resources that enter the market will also motivate shareholders, and therefore real investors will be encouraged to invest in the market.

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