At current forex rates, Iran’s capital market is worth an estimated $140 billion. This market can and will be profitable for investors if they have a long-term vision, says the CEO of Khat Arzesh Investment Consultants.
“Given that nearly 65% of companies in the currency market are export-based, increase in forex prices in the regulated market and the Nima platform, directly impacts their profit,” Farshid Zarrin Kia was quoted by SENA as saying.
Those in charge need to encourage people to make indirect investment in the stock market, he said, adding that regulation for such investment should be eased and incentives offered to attract money that otherwise flows into unhealthy parallel markets.
“Investment is crucial for the capital market if it is the function of indirect investment instruments. The reason is that in this process liquidity enters the market without fear or favor and in a professional framework. When this liquidity decides to move out feelings of excitement and frenzy are not the influencing factors. Under the conditions the stability and reliability of the capital market remains intact.”
Zarrin Kia stressed that one key measure the government should embark on to help move money from markets like foreign currency, gold and real estate to the capital market is to introduce legislation to tax capital gain.
“The regulation was ratified more than a year by the parliament and sent to the Majlis Economic Commission for final review. It has been pending for too long. With the present [chaotic] trend in the forex and gold markets, the government and parliament will have to announce the capital gain tax rules” sooner rather than later.
The CEO of Tehran Stock Exchange (TSE), Mahmoud Goudarzi, recently said the capital market funds almost 25% of the economy.
“This share was hardly 5% in 2012 when banks accounted for 95% of the lending. The increased interaction of the capital market and businesses in the past decade shows potential,” he said.
It is vital for companies, startups in particular, to improve their financial reach, Goudarzi said.
“If and when businesses are familiar with different financial instruments, they can draw on them subject to their specific sphere and seek funding from the capital market alongside other sources.”
Goudarzi said in the past decades banks and investors normally concentrated on the physical assets of companies before deciding to support them.
