Tehran, May 22, IRNA-Secretary general of Tehran Stock Exchange (TSE) said here Saturday that the TSE risk committee will issue its findings in the near future.
Speaking at a seminar on capital markets, Hossein Abdeh-Tabrizi described the various programs implemented by the organization. "The risk committee has had 34 session and its report will be available by June 10.
"Since the size of our capital markets are small and undeveloped they need to be enlarged in the near future," Abdeh-Tabrizi underlined.
Currently, the TSE's turnover is about over rls 50 billion of shares annually which is meager compared to approximately dlrs 1.4 billion in other neighboring states. The figure only indicates that the domestic capital market is undeveloped, he added.
He further highlighted the need for product diversification in the capital market.
Strengthening the national capital market is a vital factor in expediting economic growth by pooling "uncommitted" capital and channeling it into productive investments, he added.
Another aim is to increase public's participation in the markets which will boost the volume of investments in the economy and reduce the role of the government in the markets.
"With the finalization of the capital market bill, the primary market will become more regulated." Since legal supervision over the primary market has not been adequately implemented in the past, the proposed bill, will ensure that the rights of stock market investors will be enforced more thoroughly in the future.
He said another feature of the new bill is the separation of task between supervisory and exchange activities, as is practiced in other exchanges around the world, which at the present is intertwined in TSE.
"Also, the law will provide more legal underpinnings for exchange of shares in the market."
The TSE officials are of the opinion that some restriction should be applied on foreign investments in the proposed executive bylaws pertaining to amount of profit repatriation and level of participation in the exchange.
"The process of foreign investments in TSE should be gradual and systematic," he added.
It is estimated that in the next two years TSE market capitalization will exceed those of the neighboring states.
Meanwhile, stocks traded on TSE continued their growth in 2004, rising by 30 percent, according to an end-of-year review carried out by Middle East Economic Digest (MEED) in February.
The London-based weekly predicted that the all-share TEPIX index, which climbed to 13,612.2 points on December 22, was likely to continue to grow next year.
The TSE has been one of the region's best performers in recent years, with the index doubling in 2003. MEED suggested that the slowdown to 30 percent was bitter-sweet news for many investors, saying "instant profits were lower, but fears of a bubble have dissipated."
The financial sector was regarded as being the most instrumental in maintaining market stability at the TSE, after enjoying rapid growth from May to August and reaching a plateau in the autumn.
This compared with "far more volatile" industrial stocks, which have recorded large swings. But the weekly believed that the expected continued high oil price in coming months had boosted investor confidence with more public money available for projects.
In its outlook for 2005, MEED said that one of the most important changes will be the planned introduction of foreign investment in the TSE, probably through special offshore funds that are being proposed by private investment firms.
It also reported that the market itself was seeking to modernize trading platforms and establish branches in different cities, which was expected to crucially reduce the high-proportion of large state- affiliated institutional investors.
The weekly predicted that the hot sectors for next year will still be financial with newly privatised banks and insurance firms expected to do well. It also believed that although the housing boom had retreated, cement stock were likely to remain strong.
It further believed that other newly privatized businesses, particularly in the oil and gas or petroleum sectors, could be very popular in 2005.
... Payvand News - 5/22/05 ... --