An estimated 450 trillion rials ($2.7 billion) in liquidity poured into Iran‘s stock market since the beginning of the fiscal year (March 20), CEO of the Securities and Exchange Organization said.
Reporting on the performance of the bourse to members of Expediency Council (a top legislative body) on Wednesday, Hassan Qalibaf-Asl said the stock market has been well received by the public.
“Close to 450 trillion rials entered the capital market since the beginning of the year,” he was quoted as saying by the EC’s public relations office.
The figure appears overwhelming compared to money injected into the market in the past. “This is equivalent to 50% of total liquidity pumped into the market in the last fiscal year [March 2019-20],” the official said.
He ascribed the increase in the money flow to dramatic increase in the number of investors in recent weeks.
Qalibaf-Asl said brokerage companies issued 1.6 million new trading codes for new investors in little less than two months beginning in the year.
“More than 150,000 codes were issued a day,” he said.
The number of trading codes during the two-month period is approximately twice the total issued in the last fiscal year.
According to data from the Central Securities Depository of Iran, more than 822,000 trading codes were issued in the last fiscal year, taking the total stock market investors to more than 11.65 million by mid-March.
EC Secretary Mohsen Rezaei stressed the need for taking measures to direct the funds into productive sectors and creating jobs, warning that doing otherwise “will push money into gold, currency and consumer goods’ markets, which in turn would give rise to higher price inflation.”
Easing Conditions
Iran’s stock exchange regulator has said that it would ease conditions for issuing trading codes for new investors and cut red tape to encourage more people to the bourse.
Issuing codes without the physical presence of applicants is one such measure. According to a notice on CSDI website, applicants will soon be able to apply for trading codes via electronic platforms.
This comes after people in unusually big numbers and wanting to move into the bourse are seen every day waiting in long lines near brokerage firms to get the code.
A combination of sharp rise in stock market indicators and the government’s strong support for the market has rendered the bourse more attractive in recent months.
Given the runaway inflation, investors see the stock exchange the safest place to hedge the value of their assets, especially when investment in other parallel markets (currency, gold, auto) are discouraged by the government officials.
In addition, observers concur that the government needs a thriving stock market to divest its shares in state-run companies to cut its role in the economy and secure funds to meet budgetary needs.
As such, it has pledged to shore up and expand the stock market by listing more companies, and has encouraged investors to invest therein.
The benchmark of Tehran Stock Exchange has grown exponentially since the beginning of Iranian New Year in March with the TEDPIX rising from around 500,000 points to 1,017,000 points by Wednesday, to lift the index growth to over 100% in two months.
