The managing director of the Securities and Exchange Organization, Hassan Ghalibaf-Asl, has again asked government bodies to stop intervention in pricing products of listed companies.
Ghalibaf-Asl pointed to the government decision to “set a ceiling and a floor "for goods listed at the Iran Mercantile Exchange, saying that such rules are at odds with market mechanisms in which supply and demand rule.
Market observers say while policy and decision makers ostensibly take such measures to curb price gauging of steel in the domestic market and support end consumers, in essence such moves have the opposite effect filling the coffers of avaricious middlemen and intensify rent-seeking.
"While intervention in pricing commodities like steel, cement and the auto sector is aimed at protecting the [low-income] people, it hardly ever produces the desired results and harms investor interest. There always are middlemen who come out as winners of such decisions," the Securities and Exchange News Agency quoted him as saying.
Shareholders will be hurt eventually by such decisions that negatively impact profit-making of listed companies.
"In line with its legal mandate to protect shareholders, the SEO is against pricing intervention. The organization will do all it can to protect shareholders that now exceed 50 million.”
Experts say the ill-advised procedures have worsened volatility in the open market and given rise to “artificial demand” due to lower IME prices.
"Experience has it that most goods bought [at low prices] from the bourse are in the open market at inflated prices," Ghalibaf-Asl rued.
In recent weeks, the Rouhani administration’s controversial decision to set a price cap for steel products traded at IME became a cause celebre among government officials, steel producers, stock market authorities and private stakeholders.
Earlier in November the head of the Tehran Chamber of Commerce, Industries, Mines and Agriculture Masoud Khansari urged the government to rethink the steel pricing mechanism at the IME.
Khansari described the interventionist approach as "a serious threat" to the production and export of the key commodity.
In the same vein, Hossein Selahvarzi, a member of High Council of Securities and Exchange and vice president of ICCIMA highlighted the harmful effects of the controversial pricing mechanism on share prices of listed steel companies and its negative impact on market capitalization.
He linked the steep fall in share prices of steel companies as one ramification of the unwanted and unhelpful decisions.
