In order for commodity and energy exchanges to flourish in Iran, the government must take the time and, in several stages, inform the producers and consumers about the benefits of this market, Iranian expert on stock market issues Abbas Rahimi told Trend.
According to Rahimi, for example, the government can hold training programs for the sales department or even at the board of directors of factories to draw the attention of the sales department of factories to this market and thus inform the companies consuming these materials.
“The government can even offer incentives, such as tax breaks or financial facilities to factories to make these markets more attractive so that they are more willing to offer their products through the Commodity and Energy Exchanges,” he stated.
"In agricultural industry, in which the brokers play a significant role, the government can, with the awareness of farmers and incentive programs, admit these farmers into these stock exchanges so that they can directly sell their products such as soy, corn, barley, wheat, etc. to the consumers,” Rahimi said.
“According to the available liquidity statistics, if this liquidity is not controlled by the government, it will have serious consequences for the society. As we saw after the stock market crash in the fifth month of the last Iranian year (22 July - 21 Aug 2020), with the stock market losing its attractiveness for investment, liquidity moved to parallel markets such as coins, cars, and housing, which caused heavy inflation for the country,” he said.
“Production can be supported by directing liquidity to the stock market, indirectly controlling liquidity. Obviously, by supporting production, GDP can grow, and the country's economy can be protected,” Rahimi added.
“In such a situation, because people themselves are directly involved in the production, they are more inclined to consume domestic goods than foreign ones, because they themselves share in the profits or losses of the factories they invested in. Or a company applying to enter its country's capital market (stock exchange) must accept a series of accounting and management checks performed by the stock exchange organization, and then can enter the financial market with the approval of the organization," he explained.
"This is a high score for the company because it has successfully passed a series of difficult tests," he said.
“Trading stocks of companies on the stock exchange in the first place makes the company known in the country and even internationally, and the company's products are better known among domestic and especially foreign customers. Even if the company's raw materials are imported, foreign companies will be more willing to enter into contracts to sell raw materials to these companies, and in some cases, stock exchange companies may buy raw materials on credit,” Rahimi said.
Market liquidity exceeded $83 million in the past Iranian year with a growth of 40.6 percent, as reported by the Central Bank of Iran.