TEHRAN – Iran’s Securities and Exchange Organization (SEO) has unveiled a comprehensive support package to encourage activities in the capital market as shareholders are getting reluctant to invest in the market.

 

As announced by the SEO Office of Public Relations, one of the major measures considered in this package is the insurance of shareholders’ capital and dividends over the next year, IRNA reported.

The comprehensive support package of the capital market, which was designed last week and has been reviewed by the country's economic authorities, was put in effect as of Saturday morning.

Insuring the shares of real entities up to one billion rials (about $3,450) per person, issuing subordinated warrants on shares of fixed income funds up to 400 trillion rials (about $1.38 billion), injecting new resources into the market by sovereign funds to buy shares, depositing up to 50 trillion rials (about $172 million) of the resources approved in the national budget bill for the Capital Market Development and Stabilization Fund as of Saturday, as well as direct and continuous coordination, supervision and monitoring of the legal entities active in the capital market, including companies and semi-governmental financial institutions, pension funds and military institutions are among the measures considered in the mentioned support package.

The package also stresses cooperation between the Central Bank of Iran (CBI) and the Ministry of Finance and Economic Affairs to manage the interest rates.

Increasing SEO’s direct investment in Capital Market Development and Stabilization Fund, limiting the activities of marketers, and suspending the underwriting of securities and initial offerings until further notice, are also among the issues considered in SEO’s support package.

After falling about 40 percent from its peak in July 2020, TEDPIX, the main index of the Tehran Stock Exchange (TSE), is still facing a continuous decline and now the market is in a more fragile situation than before as the index has fallen below 1.3 million points.

A report published by the Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) has recently stated that the capital market is facing mistrust and uncertainty and with the continuation of the downward trend in the market’s index, shareholders are getting more inclined towards selling their shares.

Back in February, the government's economic coordination headquarters had also unveiled a support package for the capital market, which included measures such as reducing the price of petrochemical feed, reducing taxes on manufacturing companies, defining new regulations for the mining sector, increasing the capital of the Stock Market Stabilization Fund, controlling the release of government bonds, and determining the exchange rate of the banks; but this package, despite the temporary positive effects, was not able to change the general trend of the market and prevent the continuous fall of the stock prices.