Tehran Stock Market Could Catch Blackout Period

EghtesadOnline: Tehran’s stock market trading platform has been overwhelmed by the systemic increase in the number of investors and the ensuing irresistible volume of deals conducted by the seemingly dilapidated platform.

News ID: ۷۵۰۳۹۸

06 July 2020

Interruption in stock trade has now become a new norm that has drawn the ire of investors as they repeatedly complain that their (buy and sell) orders are not processed by the system or done with delays, at times inflicting heavy losses.

“This platform is no more responsive to the increasing demand,” said Rouholla Mirsane'i, the head of Securities and Exchange Brokers Association.

He said the trading platform is crammed by the inappropriate manner in which initial public offerings are made and increase in the volume of deals arising from speculative activities, Eghtesadnews website reported.

Add to this cumbersome rules that impede the flow of liquidity into investment funds. A combination of these factors, Mirsane’i said, will hurl the share market trading platform into “a total blackout”.

He linked the persistent disruption in stock market trade to investors’ inclination to invest directly in the stock market, noting that “there is no trading platform in the world capable of handling demand of such scale.”

“Equity investment penetration on average is 70% in many countries, but investment in the market is largely indirect and through investment funds.”

Investor enthusiasm to participate in IPOs and the government’s calls on the public to buy shares are seen as the primary aspects pushing the trading platform toward a blackout.

Mirsane’i called on stock market authorities to reconsider rules governing IPOs where huge numbers of people have lining up to buy shares of newly-listed companies.

Making History

In a recent case last Wednesday, close to 4.5 million investors took part in the IPO of Tamin Cement Investment Company, a number never seen in Iran’s bourse history, thanks to the slew of investors entering the share market every day.

Close to 1.24 million trading codes were issued for investors since the beginning of the current fiscal year (March 20) up until mid-June, according to the Securities and Exchange News Agency.

The figure is mindboggling given that in the entire last fiscal year (March 2019-20) 822,000 trading codes were issued. More than 13 million Iranians now have trading codes.

Upsurge in the number of investors during the relatively short period is said to be due to the growing traction of the bourse and high returns on investments so far.

The managing director of Securities and Exchange Organization Hassan Qalibaf-Asl said earlier that 500 trillion rials ($2.4 billion) in fresh capital flowed into stocks in the first quarter of the current fiscal year.

This is while the total capital inflow throughout the last fiscal year was 300 trillion rials ($1.4 billion).