Data released by the Central Securities Depository of Iran show that the number of trading codes has reached 20.5 million.
More than 40% of the codes was issued in the current fiscal year that started March 20, according to the CSDI website.
The first six months of the year saw a flurry of new investors into the stock market that was unheard of in the 53-year history of Iran’s bourse.
More than 8.83 million codes were issued for these investors by the CSDI in the first half of the year, an unusual number compared with less than the 12 million issued in more than a half a century.
The CSDI data said in the entire past fiscal year (March 2019-20) 822,000 trading codes were issued. Likewise, on average 600,000 codes were allotted annually in the past eight years.
Tehran Province accounts for the highest number of codes with 3.45 million and Kohgilouyeh-Boyerahmad Province the lowest at 186,581.
Isfahan, North Khorasan and Fars are next with 1.55 million, 1.41 million and 1.37 million codes.
The dramatic upsurge in the number of investors in a relatively short period is said to be due to the growing traction of the share market among the public in light of its historic gains in the first months of the year.
Moreover, the government’s repeated reassurances about the profitability and safety of the market encouraged many to put their money in the bourse.
The main index of Tehran Stock Exchange, TEDPIX, grew 270% in little more than four months -- from 500,000 points in March to 2.2 million points in early August.
However, in recent days the tide has turned for the worse as share prices crash and the bourse grapples with almost uninterrupted losses forcing investors of different stripes to seek refuge in safe havens, namely gold and currency markets.
Struggling to secure funds for its chronic budget deficit, the government whetted investor interest with plans such as offering shares via exchange-traded funds and removing the ban on trading the so-called ‘Justice Shares’.
Justice Shares are shares of big government-owned companies given to the six lowest income deciles a decade ago. The shares were given free and were not tradable until May.
Close to 49 million Iranians own the shares and need trading codes to sell them in the stock market. The CSDI says it plans to issue trading codes for all owners of such shares that would expand the total codes to more than 60 million.
In other words, almost 80% of the population will have trading codes, placing Iran among the top in the world in terms of percentage of stock ownership.
Bane of the Market
Observers say such an unusual number of investors, mostly those lacking financial acumen, is a bane of the market conspicuous in the nose-diving market.
Market experts have made known that the share market is the function of expertise and newcomers should abstain from direct investment in stocks and investment funds or asset managers should handle trade on their behalf.
Currently more than 80% of stock trade is undertaken directly by individual investors, according to Reza Kiani, the Tehran Stock Exchange’s deputy for research and development.
“Investment funds account for 5% of stock market trade. A stable market means a bigger role for investment funds not direct investment,” he was quoted as saying by SENA, the Securities and Exchange News Agency.
