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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT APRIL 2007
TEHRAN STOCK EXCHANGE
Dr. Ali Rahmani
Managing Director
In 2006, the TSE established a set of
fundamental and structural reforms in order
to create possibilities of a considerable
growth and development in the future.
The year 2006 can not be considered as a
successful period for the Tehran Stock
Exchange (TSE) however, within that year TSE
has established a set of fundamental and
structural reforms in order to create possibilities
to obtain a considerable growth and
development in the future. The new Securities
Act has allowed establishing an independent
regulator with sufficient legal authorities in order
to convert TSE to a "For-Profit" public joint stock
company and expand the diversity of financial
institutions and instruments.
In the first half of 2006, market continued the
bearish trend which had been started in 2005; a
resurge period has started since the second
half of 2006 and experienced a fair growth until
the end of year. The TEDPIX, which evaluates
the market total return, was increased by 8.28%
from 28,821.8 to 31,207.6. The TEPIX (all
shares price index) and market capitalization
has been decreased slightly. TEPIX decreased
1.8% from 10,258.9 to 10,074.4, and market
capitalization decreased by 2%. In 2006 two
new companies were added to the TSE list
while 90 companies have relegated to the new
“Unofficial Board” which is in fact temporarily
de-listing. Therefore, the final number of
companies decreased from 420 to 332
companies. The remaining key statistical figures
in 2006 in comparison to 2005 are as follow:
1. Financial index decreased by 28.16% from
25,150.59 to 18,068.84
2. Industrial index increased by 1.59% from
7,957.47 to 8,083.81
3. Volume of trades decreased by 19.9% from
13,123.62 to 10,939.79 million shares.
4. Turnover decreased by 60.99% from
US$ 7,866.25 to US$ 4,885.88 million.
5. Number of trades decreased by 24% from
2,252,972 to 1,816,144.
The bearish trend in 2006 can be justified by
the following explanation:
Existence of better trade opportunities in the
market compare to 2005, the increase of
consuming goods import as a result of increase
in oil revenue and inflation rate from 12.1% to
13.5% (beside government price control
polices) caused higher production cost and
lower firms profit.
Despite having 8% growth of investment rate
with respect to previous year and 2% to 5%
decrease in banks loans rate, economic growth
has been constant at the rate of 5%. This can
be explained by the fact that the main
investment expenditure had been invested on
the infrastructure sector which has lower rate of
return compare to other sectors in the
economy.
HISTORY AND DEVELOPMENT
The TSE was founded in 1967, by starting with
only six listed companies, since that time, TSE
has experienced a considerable changes in the
path of development. Today, TSE has evolved
into an exciting and growing marketplace. Now
there are 332 companies that investors trade-in
securities hall.
With the implementation of new Securities
Act of 2006 and the completion of the
demutualization process, TSE has improved
facilities and opportunities to achieve its own
plans.
TSE's mission is setting the agenda for change
in the securities markets in Iran. TSE must be
more than a mere market facilitator. It ought to
be able to guide industries towards a new
horizons and greater opportunities. TSE must
promote the Iranian Capital Market to respond
to the socio-economic development needs of
the nation. The Market should help to stimulate
industrial as well as economic growth and
development of the Iranian economy. TSE is
preparing to maintain a free and open market
in order to give opportunity to the investors to
convert their cash into securities at a fair and
honest price and vice versa. TSE is developing
to become a highly liquid secondary market for
securities to raise funds and win confidence
from all stakeholders.
The TSE is going to operate as a world-class
marketplace for Iranian securities and
derivatives products. It strives to offer issuers
access to a wide national capital market and
maintain an open, secure, fair, orderly, efficient
and transparent marketplace. It must contribute
to Iran’s status as an economy which intends
to open-up to international financial centers.
By servicing Iran’s substantial long-term
demand for capital and exchange services in
accordance with international standards and
practices, TSE has the potential to become
one of the pre-eminent Exchanges in the
Persian Gulf area.
FUTURE OUTLOOK
The TSE is currently working on the following
goals:
• installing of the new trading software which
will be purchased from AEMS during second
quarter of 2007.
• facilitating new privatization plan through
transferring shares of public enterprises to the
private sector.
• providing shorter settlement cycles and book
entry settlement systems to meet the current
international standards of securities markets.
• providing diverse securities of high quality to
raise funds.
• offering timely, accurate and complete
disclosure of information and widespread
investment-related education.
• establishing OTC Market.
• relocating the Exchange to the new building.
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