Before the Supreme Council of Economic Coordination convenes, a group of 100 stock market experts and managers of listed companies in a letter recommended ways to help lift the sagging bourse.
Comprising heads of the three branches of power, the council is to convene Monday with the bad health of the share market on the agenda.
Recommendations include ways to procure and direct financial resources into the bourse, reform rules and avoid unwanted and unhelpful intervention in the market, Fars News Agency reported.
Market experts have asked the government and its Securities and Exchange Organization, the stock market regulator, to deposit earnings from tax on stock trade with the Capital Market Stabilization Fund. The funds could be invested in stocks on behalf of the government.
CMSF was created in 2017 to help resolve the credit crunch in the bourse, support the market and safeguard investors’ interest.
While there is no update on the government income from tax on share sales, the Iranian National Tax Administration reported 99 trillion rials ($380 million) in tax revenue from this segment in the first half of the last fiscal year (March- Sept 2020).
The letter asked the SEO to play by the rules and transfer 1% of the revenue of the National Development Funs of Iran to the CMSF.
On the judicial front, the experts asked relevant authorities to channel money from financial penalties taken from malefactors and managers of listed companies in the share market.
They asked authorities to ease limitations on banks in giving loans to investors and brokerage companies to buy shares.
Unhelpful Intervention
As in the past, government bodies have been asked to stop intervening in pricing products of listed manufacturers. Signatories of the letter censured the decision by administrative bodies to “set a ceiling and a floor "for prices of goods listed at the Iran Mercantile Exchange, saying that such rules “are at odds with market mechanism” in which supply and demand rule.
Observers say shareholders will be hurt eventually by such decisions as they negatively impact profit-making of the listed companies.
In recent months, interference of the Industries Ministry in prices of steel and mineral products offered at the IME, added to the share market volatility.
To involve the stock market regulator in decision making, the capital market experts also asked the government to allow SEO partake in Cabinet meetings and other important sessions whose outcome could impact the bourse and the rights of millions of retail investors.
They urged senior government officials to offer incentives to encourage people to put their money in stocks and shares.
Incentives could range from tax holidays to listed companies to discount on feedstock prices sold to refineries and petrochemical companies -- seemingly big players in the share market.
Following historic gains in the first few months of previous fiscal (March 2020-21), Tehran’s share market went into a tailspin from mid-August that has continued to the day.
The benchmark of Tehran Stock Exchange, TEDPIX, shot up 300% before diving deep into the red and paring close to 50% of the gains.
The prolonged downturn has drawn the ire of millions of retail investors, who accuse those in charge with doing nothing to revive the market that has long lost its allure after the bubble burst.
Over the past several months retail investors who lost almost all their savings in the bourse continue to protest in front of the stock market and other government buildings demanding compensation.
