Added to the mix is the Iranian parliament’s 2014 push to force the Rouhani administration to make significant changes to the price of petrochemical feedstock, which critics argued were unfairly low. Indeed, at that time, when global demand for petrochemicals and metals began plunging, Iranian lawmakers approved a hike in the price of petrochemical feedstock and also a rise in mining royalties — decisions that virtually all financial pundits believe led to the continuous fall in share prices in the ensuing months, given that the majority of market players in Tehran are involved in businesses related to the oil, gas, petrochemical and mining sectors.
Yet, top market authorities are confident that the future of Iranian capital markets will be rosy. In a recent interview with the leading economic magazine Tejarat-e-Farda, the head of the Securities and Exchange Organization (SEO), Mohammad Fetanat, said that officials are planning to decrease the price of petrochemical feedstock in a matter of weeks and provide investors with a 10-year schedule in this regard. The latter would enable investors to manage business risks in a more effective way.
Among other measures the SEO is set to take in the near future is the launch of a foreign exchange derivatives market, a new instrument that both the chairman of the Central Bank of Iran and a board member of the parliamentary economic committee see as crucial to attracting foreign investment. Boosting the sukuk (Islamic bonds) market is key to achieve sustainable development, market officials argue.
However, there is still no official word on structural reform of capital markets. The state structure of markets has so far prevented many companies from being represented. According to Mohammad Reza Rahbar, a former board member of the TSE, only 400 out of 700,000 Iranian companies are represented in the market, with some of these 400 firms contemplating whether to leave the market due to the many constraints, red-tape and shortage of resources.
Rahbar believes that among the measures that could revive investor confidence trust is the introduction of a long-term plan by capital markets authorities to give investors insight into how monetary, financial and trade policies will develop in the future.