News ID:192988
Publish Date: Wed, 17 May 2017 18:15:15 GMT
Service: Iran

Report: Capital market has grown under incumbent government

Report: Capital market has grown under incumbent government

Iran's capital market has witnessed a significant growth since President Hassan Rouhani assumed office in 2013, a report suggested.

The report, published by IRNA, said the value of transactions has grown, new financial mechanisms have been employed and emerging as well as small companies have garner more support over the past four years.

These are among the measures pursued in the capital market to safeguard the rights of investors, boost transparency and update as well as implement laws more properly.

 

 

Security bonds

The government has issued security bonds in the capital market to settle a portion of its debts to the private sector and contractors. The administration issued security bonds valued at $2.2 billion repay its debts in the year to March 2017.

 

 

Guaranteed price mechanism

The guaranteed purchase of agricultural products have always inflicted huge costs  to the government. Hence, efforts were made to replace guaranteed purchase of agro goods with a method based on prices.

In this mechanism, the government sets a basic price for the commodities. Such a price is then balanced through the supply-demand cycle.

 

 

Derivatives

Derivatives are among modern financial mechanisms to cover investment risks. They consist of Futures Contract and Options which are used in markets across the globe.

 

 

Bond futures

Companies have issued bond futures to generate financial resources for their projects.

 

 

Market for small companies

Small companies are not able to enter the capital market thus depriving them of the benefits of the stock exchange market. Hence, a market has been set up at Over-the-Counter (Fara) Bourse to enable such small companies to take advantage of the capital market and attract financial resources as well as investment.

Over 80 companies have applied to enter the Over-the-Counter Bourse, of which six have so far been admitted.

 

 

Promoting transactions

The systems of transactions in Tehran Stock Exchange and Iran's Over-the-Counter Bourse have been separated to promote the capacity of conducting transactions. After the implementation of the Iran nuclear deal, the system of transactions can be updated thus reducing the risks posed to the systems of transactions.

 

 

Launching venture capital

Venture capital (VC) is a type of private equity, a form of financing that is provided by firms or funds to small, early-stage, emerging firms that are deemed to have high growth potential, or which have demonstrated high growth (in terms of number of employees, annual revenue, or both).

It is a very important source for launching businesses which are too small to enter the capital market.

 

 

Inflation-protected securities

Inflation-protected securities are a simple and effective way to eliminate one of the most significant risks to fixed-income investments — inflation risk — while providing a real rate of return guaranteed by the government.

Inflation-protected securities appeal to investors who do not normally take a risk and they are more popular in countries which experience high inflation rates.

Regulations to issue such securities have been drawn up.

   
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