TEHRAN – Iranian market analyst Hassan Balazadeh has proposed three solutions for improving the trend of the stock market and resolving some of the problems that the market is currently wrestling with.As IRNA reported, revising the regulations regarding the public float stock, determining ceiling and limitation for the Initial Public Offerings (IPOs), and finally establishing a support fund for certain stocks were the solutions that Balazadeh has proposed.
According to Balazadeh, one of the problems that can be quickly addressed in the current situation is the issue of float stock. Based on the capital market law, companies in this market must offer at least 10 percent of their shares to public investors. In recent years, the increase in companies’ capital from revaluation has made them bigger and following this growth most companies need more liquidity to back them up.
So, the regulations in this regard must change in a way to oblige such companies to offer more of their shares in the market.
Secondly, the analyst offered that for those companies who are going to offer their shares for the first time, a ceiling must be set for the price of the shares and if they exceed the set criteria and the stock falls in the future the owner company should be obliged to refund the shareholders paid money.
Regarding the support fund, Balazadeh said this fund can be set up with a part of the dividend of the companies in the general assembly and with the agreement of the shareholders. This way, shareholders can agree to allocate a portion of their dividend to the mentioned fund to support the stock when needed.
According to the official, the development of the stock market and inviting people to bring their assets into this market required the preparation of infrastructure. But the government encouraged people to participate in this market before the infrastructure was ready and that caused the current problems.
He said last year the market was not ready to absorb the huge amount of liquidity that was flown into it.
“When a market is to be developed, the base and infrastructure must be developed in the first step,” he stressed.
Original News : https://www.tehrantimes.com/news/461756/Market-analyst-offers-solutions-for-amending-stock-market