Iran’s stock market is among the worst in the world when it comes to upholding the rights of retail investors, the general secretary of the Iranian Institutional Investors Association (IIIA) said.
Speaking at a meeting with the Securities and Exchange Broker Association, Saeed Eslami Bidgoli said institutions that govern the stock market “must protect the rights” of all beneficiaries, including retail shareholders.
“Iran’s stock market ranks among the lowest world in terms of observing the rights of retail investors,” he was quoted as saying by ISNA.
In particular, he underlined the priority of setting up a guild union specifically to represent retail investors in the policy and decision making process.
Given the unprecedented increase in the number of retail traders in the past two years, he said the time has come to give voice and space to retail investors in decision-making.
“The IIIA is prepared to take on the task of setting up the retail shareholders association”.
Iran’s share market for been struggling with a near permeant decline that began after the bubble burst in mid-2020 unleashing a non-stop dumping of shares as investors in increasing numbers rush to the exits.
Economists and experts recall that millions of retail investors who bought shares before the market crashed are the main victims of the historic collapse.
The number of active trading codes in the bourse saw a dramatic rise in the past two years -- surging to 37.5 million by end of the previous fiscal year on March 21.
That was 260% higher from the codes in March 2019 as a deluge of new investors entered the market, according to the Securities and Exchange Organization.
Bidgoli said the proposed guild union would protect the “taken-for-granted interest” of retail investors, namely by creating the conditions for their participation in decisions made during annual meetings of listed companies, distributing share dividends and the like.
Mandatory Pricing Policy Censured
The capital market expert censured the role of administrative bodies in imposing arbitrary prices on products of listed companies, saying such unwanted interference are against rules governing the bourse.
“We are not even able to use our legal potential to fight the compulsory pricing because rules require the government to compensate investor losses if it intervenes in the affairs of listed companies,” he rued.
Despite the apparent detrimental impact, policy and decision makers tend to intervene in setting prices for a variety reasons. But they seem to be guided by the misplaced perception that controlling prices is the best way to support end users -- a misguided approach that has never delivered and has long been a part of the problem rather than the solution.
Academia and informed observers stress that setting arbitrary prices by the government and not letting prices be determined by the demand and supply mechanism are intrusive and to the detriment of manufactures, consumers and suppliers.
The issue came in the limelight recently when the government decided to set a price ceiling for some goods offered in the Iran Mercantile Exchange.
In the past few years many listed companies failed to make a profit due largely to obligations to sell at prices dictated by the government. Capital market officials claim ending mandatory prices will have an early positive effect on the finances of such companies.
Steel, cement, dairy, electricity, fuel, medicine and cars are among key items that have fallen victim to stringent government pricing regulations that stubbornly prevail despite its visible harm.
