Unprecedented growth of the capital market in 2 years


TEHRAN- Over the past two years, a number of factors affecting the Iranian economy have created a new status in the country’s capital market such that this market has seen such growth in the past calendar year Iranian 1399 (completed March 20) than has ever been seen in its over 50 year history.

Falling oil prices and the reimposition of unilateral US sanctions on the Iranian economy have led the Iranian government to turn to the capital market for financing.

On the one hand, the government has tried to prevent liquidity from going into markets such as gold and foreign currencies, and on the other hand, given recent events in the Iranian economy, it is also looking at this market from a financing perspective, which has contributed to the prosperity of this market.

The increase in the rate of inflation as well as that of the exchange of foreign currencies were also mentioned as two major factors leading to the boom in the capital market.

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

ETF creation

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

Dara First, listed on the Tehran Stock Exchange, which is Iran’s main stock exchange, was the first in a series of three ETFs, through which shares of certain organizations and public companies are expected to be offered.

The shares that will be offered through the mentioned Iranian ETFs belong to the government bodies set out in Iran’s privatization program, a comprehensive plan that the government is seriously pursuing to reduce its size and 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 is also planning to sell shares in giant auto and metallurgical companies through a third ETF (called Dara Third).

No more IPOs

In line with the flourishing status of the capital market, TSE organized more Initial Public Offerings (IPOs), some of which were linked to major entities.

On April 15, the Iranian stock market experienced its largest IPO in history, with the Social Security Investment Company (SSIC, also known by its Persian acronym Shasta) offering eight billion shares, representing 10% of its shares. shares, for sale in Tehran. Stock Exchange.

In fact, the market tries to attract the existing liquidity in the company towards production and development projects. Thus, many ministries and organizations, including the Ministry of Transport and Urban Development, have announced that they plan to finance their development projects through the stock market.

Better public knowledge of the capital market

While certain economic factors such as the reduction in the bank interest rate and the less lucrative status of parallel markets, including the gold coin, forex and housing markets, have led people to invest in the market. capital, their better knowledge of this market has also been an important factor contributing to the development of the capital market.

Securities and Exchange Organization (SEO) has taken significant steps in this regard to familiarize people with the capital market and investing in it.

SEO chief Mohammad-Ali Dehqan Dehnavi said on Wednesday that the capital market has seen many changes over the past two years, and in terms of size, volume of activity and presence of people, there are had significant growth and these rapid changes have changed some equations.

The official also announced that the SEO Advisory Board has proposed two new programs to support the stock market in the current Iranian calendar year (started March 21).

The mentioned programs, titled “Capital Market Policy Package to Support Production and Remove Barriers” and “The Plan to Improve the Position and Performance of the Capital Market” are supposed to increase investment in the stock market. which can lead to the economic prosperity of society, by controlling liquidity, or even the optimal use of micro-savings.

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