90% of Stock Market Trading Codes Dormant

EghtesadOnline: A review of the performance of investors in the stock market shows that only 10% of those who have trading codes have engaged in trading since the beginning of the current fiscal year in March.

News ID: ۷۸۵۱۶۳

24 December 2019

According to a report by the Central Securities Depository of Iran, out of more than 11.2 million trading codes issued so far, almost 90% remain largely inactive.

During the month to Nov.21, 1.18 million trading codes conducted 1-10 trades. Also, the number of investors who  conducted at least one trade since the beginning of the year stood at 1.8 million.

However, investors’ inactivity has not been consistent in the year, as a relatively higher percentage of codes participate in the market when a newly listed company offers shares in an initial public offering, Financial Tribune reported.

As such, in many cases hundreds of thousands of investors bought shares via the IPOs,  but at other times there are mainly professional investors who dominate the market.

In one recent case, more than 875,000 investors took part in the IPO of Sepid Farab Kavir Steel Company  in October when investors bought 10% of the company’s stake worth 2.4 trillion rials.

Earlier more than 562,000 investors had participated in the IPO of the newly listed , Nouri Petrochemical Company. This firm   offered 10% of its shares worth 96 trillion rials ($750 million).

Over the eight-month period from the beginning of the year up until Nov.21, more than 376,000 trading codes were issued for new investors.  The figure represents about 14% of the population and more than 20% of the country’s adult population.

Real entity investors are the majority in the stock market compound, holding 84% of the total. This is while legal entity investors contributed more to the value of trade, accounting for 30% of the total value.

Rise in the number of trading codes indicates increasing allure of the capital market, especially in light of the lackluster performance of parallel markets.

Disappointed by poor returns on gold, foreign currency, auto and house markets, investors with limited financial foresight in the past few months have turned to the capital market as a safe haven.

The capital market has seen a dramatic surge thanks to the fresh liquidity of newcomers, helping the TSE to grow almost double since the beginning of the current fiscal year.

Although the stock market has always been dominated by men, the number of female investors has been rising. As per CSDI data, the number of trading codes owned by women has crossed 3 million, 115,700 of which were issued since the beginning of the year.

This means that women account for 26.7% of total investors.