Business And Markets

Hassan Rouhani: Bourse Should Be Apolitical

Hassan Rouhani: Bourse Should Be Apolitical
Hassan Rouhani: Bourse Should Be Apolitical

President Hassan Rouhani on Sunday warned that reckless statements by politicians will hurt the stock market. 
Speaking at the Government Economic Coordination Headquarters, Rouhani said, “The stock market is very sensitive and disparaging comments can undermine it,” reported. 
He pointed to public statements by some political figures that “create anxiety about access to [foreign markets] and the export capacity of companies that undermine the bourse.”
The meeting was attended by the managing director of Securities and Exchange Organization, Mohammad Ali Dehqan-Dehnavi, who briefed the Cabinet about conditions in the share market.   
Proposing ways to restore calm and stability to the market, Dehqan-Dehnavi made an appraisal of the Capital Market Stabilization Fund and outlined measures to balance it. The website did not say what those measures are. The market has been struggling to survive since last summer when the bourse bubble burst. 
The CMSF was created in 2017 to help resolve the credit crunch in the bourse, support the market and safeguard investors’ interest. 
The meeting came as the share market continues to plunge with millions of retail traders hit hard and many have lost more than 70% of their savings.
Many blame the government for their misfortune and have demanded it fulfill its promises to buttress the bourse. To what extent that is possible is not clear.  
On the back of the flood of liquidity from neophyte investors, TEDPIX, the main index of Tehran Stock Exchange, crossed an all-time high of 2.1 million points last August, recording an unprecedented 300% growth in less than five months. The crash came soon after to the dismay largely of small investors with little or no knowledge about the nature of such markets. 

Role of Banks  

Rouhani underlined the urgency to make “efficient and sustainable efforts” to end the collapse of the stock market and highlighted the role and significance of banks. “Banks should rise to the occasion and help revive the market by giving credit [loans] to stock investors.”
His views echoed those of many who have pinned high hopes on banks as the last resort. Overburdened by their own funding problems and mountains of bad debts, banks have come under mounting pressure to inject liquidity into the failing stock market. So far they have shown no interest. 
In a letter to members of Supreme Council of Economic Coordination, comprising heads of the three branches of power, a group of 100 stock market experts and managers of listed companies at the weekend asked authorities to ease limitations on banks in giving loans to investors and brokerage companies to enable them to buy shares. The council is scheduled to meet this week.  
Pointing to the meeting and role of banks in lifting the stock market, Mohsen Alizadeh a member of High Council of Securities and Exchange, the capital market policymaker, said the council should compel the Central Bank of Iran to open a credit line for banks and their affiliated investment funds to help restore demand for shares.  
He argued that banks along with big holding companies made high profits during the heydays last year and are financially capable of returning some of those gains to the share market.
“These companies should step in and help improve the market and the council must consider this option,” he was quoted as saying by Securities and Exchange News Agency. 
In line with bourse council decisions, the CBI in January instructed lenders to direct extra resources to affiliated investment funds. 
In the same vein, the CBI has agreed to increase the investment ceiling for bank-affiliated investment companies in the share market. The ceiling now is set at 500 trillion rials ($2.2 billion) up from 300 trillion rials giving the funds more leeway in the market.

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