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Code: 50241 Visited: 40 Publish Date: Jul 07 2018 - 10:23
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Capital Market
Markets Need Expansion of Islamic Securities
Tehran, Jul. 07 (SENA) - Following the skyrocketing prices in gold, housing and auto markets mainly due to Iranian rial devaluating in recent months, the new phase of the growth encompassed the stock markets. Tehran Stock Exchange’s main benchmark TEDPIX took over its all-time psychological level of 100,000 and stood at 112,346 at the end of the last trading session, 3 July.

Tehran, Jul. 07 (SENA) - Following the skyrocketing prices in gold, housing and auto markets mainly due to Iranian rial devaluating in recent months, the new phase of the growth encompassed the stock markets. Tehran Stock Exchange’s main benchmark TEDPIX took over its all-time psychological level of 100,000 and stood at 112,346 at the end of the last trading session, 3 July.

Many analysts and market practitioners welcomed the trend as they believe the growth of the capital markets is beneficial for the domestic economy. Many others argue that the bull market might lead to a bubble state. The risks to rewards of alternatives investments are currently high and the capital market seems to be the safe harbour for the investors, at least for the time being.

“The shareholders and investors must understand that price increases have to be proportional to the companies’ facts and intrinsic values so bubbles won’t shape. The capital market as the thermometer of the economy must reflect its real conditions” Said Golamreza Aboutorabi, CEO of Central Asset Management company.

The CEO mentioned that controlling the liquidity and attracting the society’s excess funds to be used as finance sources for productivity in the economy is a main mission of the capital markets. The infrastructures, financial institutions and instruments in Iran are properly fulfilling the mission but Abotorabi noted that both the primary and secondary markets must be further strengthened. In this regard, privatization of state-owned entities, expediting capital increases and providing new financing opportunities like crowdfunding, Islamic securities for SMEs were counted by Abotorabi as pivotal.

Abotorabi also noted that the government is increasingly relying on the capital market for its financing needs by using simplified instruments like Murabahah and Ijarah sukuks. “To balance its budget, the government cannot simply employ traditional tools,” he added.

Different Sharia-compliant fixed-income securities or sukuks in Iran provide various investment options for a full spectrum of risk appetites. Abotorabi emphasized that expanding the debt market will automatically advance the capital market and act as a powerful toolbox for monetary policy officials.

In this regard, Central Asset Management Company, as the custodian, is striving to facilitate, proliferate and expedite sukuk issuance in Iran. His team is trying to shorten the cumbersome issuance process and cut down on bureaucracies as in many cases the longevity of the process makes the case obsolete and kills the company’s mood.

To make the issuance possible for SMEs, Abotorabi underlined that excessive costs of parties like the guarantor, market maker and underwriter must be omitted and complicated investors must accept the underlying risks, who in return will enjoy higher returns. The recent directive by board members of SEO allows the issuers to exclude the guarantor which dramatically impacts the issuance costs.

In the end, Abotorabi expressed that all capital market authorities must work to develop new investment vehicles and this helps both investors and entities to further shift toward capital markets for their financial goals, which helps Iran’s economy and prevent the flow of money into non-productive investment destinations.

 
By: Security and Exchange News Agency (SENA)
 
 
 
 
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