TEHRAN – Iranian Finance and Economic Affairs Ministry has said in a statement that fluctuations in the capital market are normal and not every decrease in the market index means the market is constantly falling, IRNA reported.

In response to some negative reports by local newspapers about the recent decline of the Tehran Stock Exchange (TSE)’s main index (TEDPIX) over the past few days, the ministry released a statement scolding the mentioned reports for inducing doubts about the future of the stock market.

“Inducing doubt about the future of the stock market is not a logical approach in a situation where an atmosphere of hope is becoming dominant [in the market],” the statement read.

“Contrary to the approach of the previous government [administration], the 13th government has not looked at the stock market as a means for generating income and has always tried to support the capital market,” the statement said.

The government's view of the stock market in the past year has been a strategic one, and it has provided a series of supports with a short-term, medium-term, and long-term view of the stock market, and the support has never been done for a specific period and with a short-term view only, the ministry stressed.

In late October, the Securities and Exchange Organization (SEO) unveiled a comprehensive support package to encourage activities in the capital market as shareholders were getting reluctant to invest in the market.

One of the major measures considered in this package was the insurance of shareholders’ capital and dividends over the next year.

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 were among the measures considered in the mentioned support package.

The package also stressed 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 were also among the issues considered in SEO’s support package.

Following this support package, the market started a modest upward trend earlier this month which continued for almost a week, however, TEDPIX once again fell off the track and the index has been falling over the past week.

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.

EF/MA