SEO: Stock Market Transparency Improving

EghtesadOnline: Transparency seems to be returning to Iran's capital market, as Securities and Exchange Organization's latest data show.

News ID: ۷۸۲۹۱۹

17 June 2018

From the investors' perspective, the Iranian capital market had a major problem in recent years: Companies refused to report their financial information, or, at best, delayed publishing the data by months and years.

But SEO said that has changed now. The refusal to report data has dropped from 44% of the exchange-listed firms mandated to release reports on Codal.ir to a meager 5% in the past four fiscal years (March 2014-18), according to Financial Tribune.

This is while on-time reporting reached 86% by March 2018, up from 32%, SEO reported.

Graphs provided by the organization show that the highest rate of transgression was in June-September 2016 when the rate of on-time data reporting dropped to 13-15%.

Actions taken in the next few months, including reporting the offenders to relevant government bodies, caused rates to steadily grow until March 2018.

Actions included preemptive attempts such as texting the companies' financial managers, managing directors and board members regarding the legal data reporting periods and the consequences of stepping out of bounds, as well as reforming capital market's regulations on general meetings and company listing guidelines, Securities and Exchange News Agency reported.

SEO has recently published a list ranking Tehran Stock Exchange's 303 listed companies based on their transparency ratings for the previous fiscal year (ended March 20, 2018).

The ratings are based on the companies' data reporting quality, with factors including earnings per share forecast, portfolio reports, financial statements and dividend payment plants.

Mobile Telecommunications Company of Iran was at the top of the list by scoring 100 for promptness, 99.69 in information reliability and 99.90 in reporting. MCI was the year before last's champion, too.

The next four ranks were taken by Mobin Petrochemical Company, Telecommunications Company of Iran, Zahravi Pharmaceutical Company and Butane Industrial Group. The first three also scored full in timely reporting, but had lower standings in other categories.

The five lowest had some of the stock market's most infamous companies among them, namely banks.

Parsian Bank was at the bottom with a 1.53 score in timely reporting, 0 in reliability and 1.02 in reporting. Bank Pasargad came next with slightly better scores, followed by Tejarat Bank, Pars Electric Company and Post Bank of Iran.

In fact, exchange-listed banks made up a sizable share of frozen shares on Tehran Stock Exchange and Iran Fara Bourse for years, primarily due to delays in data reporting.

With their shares barred from trading for periods over a year and a half, their return to the market also caused havoc and massive drops in market indices. As a matter of fact, it was the banks' sorry state on the stock market that brought about protests by investors and attempts at market reform by regulators.

Some of the banks, such as Tejarat, Saderat, Mellat and Post Bank, have already returned to trading and attempted to fix their standings with investors, but their transparency and reporting quality are still not up to the mark.