Head of the Majlis Economic Commission in a letter to President Ebrahim Raisi called for incorporating 10 support measures designed to revive the struggling bourse in the fiscal 2022-23 budget.
“Given the sensitivity of the stock market to budget rules, the government should enshrine the [precise] support measures in the next budget via a supplementary draft to the budget,” Mohammadreza Pour Ebrahimi said, the Securities and Exchange News Agency reported.
Experts say adding the support measures, announced recently by the government, in the budget law would create an obligation for the executive branch to deliver rather than give lip service and empty promises of improving the bourse to appease and attract investors as seen in the past.
In December, the Economy Ministry announced 10 measures to support the bourse, which has seen systemic declines since for more than 18 months.
Adjusting the prices of gas feedstock sold to listed manufacturing companies, channeling tax income from share trade into the market via the “stabilization fund” and reducing tax rates levied on manufacturing firms listed with Tehran’s share market by 5 percentage points (from the previous 25%) are among the key measures planned by the Raisi administration.
As per another decision, the parity rate for foreign currencies will be increased substantially, which is expected to improve the finances of 18 listed banks.
From what is known, the parity rate will increase by up to 90% compared to prices quoted at the secondary foreign exchange market known as Nima -- an online platform where exporters sell their overseas currency income and companies buy for import.
The parity rates are used by lenders as the basis for their financial statements. It is also used by lenders to prepare or revise their books.
Support also includes measures to help improve the liquidity of shares. For instance, 10% of the money from initial public offering of a new listed state-run company must be used for market making operations of that company to ensure shares are traded smoothly.
Along with his request the MP added proposals by stock market experts to fine-tune the support measures. In his letter to Raisi, Pour Ebrahimi reiterated calls by Saeed Eslami Bidgoli, the secretary general of the Iranian Institutional Investors Association and Mohammadreza Dehqani, the head of the Securities and Exchange Brokers Association.
The two men have called on the Majlis to eliminate the mechanisms outlined in the budget that allows the government to intervene in the stock market directly or otherwise.
They have dismissed measures that involves pumping money into the stock market, calling on the government to instead uphold market mechanisms and avoid unhelpful interventions like imposing mandatory prices on products of listed companies – a pattern that has harmed not helped the stock market.
