According to many international stock market analysts, each country is a full-fledged mirror of a country’s economy, and the greater the transparency and volume of transactions, the greater the prosperity of the economy and the improvement of the lives of the people and the general public. Was. In Iran, the stock market is a full-fledged mirror of the country’s economy and shows structural challenges in the macroeconomy. We will continue to discuss some recent events in the capital market. Please be with Artan Press.
*** Stock market status this week
Tehran Stock Exchange started the week positively and everyone was waiting for the growing path and reaching the real stock index. But from the very first days of the week, the demand in the stock market subsided and we practically saw heavy sales queues that faced a lack of buyers. have been. Given the changes that had taken place in the capital market, these events were not unexpected and merely changing the scope of the stock market could not work alone. Along with the range of asymmetric fluctuations, there is a need to inject liquidity. If liquidity is not injected into the stock market, we will see large positive days, and small negative days and erosion.
*** The reason for the erosion of these days of the stock market
The small and erosive days we experienced on Tuesday and Wednesday in the Tehran Stock Exchange were due to the incorrect implementation of the asymmetric domain approach. This method has been used and answered in the world, but it is not compatible with the profit and loss mechanism mechanism of Tehran Stock Exchange and must be applied simultaneously with other factors in the market, otherwise the result will be the same as what we saw in the market in the last three days. It is enough to look at the value of the last three days of trading on the stock exchange and you will notice that there is a severe recession in the trading and neither buying nor selling results. Unfortunately, with this situation, the stock market will not go anywhere until the end of the year.
*** Why pay attention to market factors in a one-dimensional way?
It is surprising why the policy makers of the stock exchange organization do not learn from the past days, which are not far away. The domain of ascetics was applied in the Iranian stock market last year, in the midst of the martyrdom of Sardar Soleimani, but this plan alone had no effect on the preservation of the capital market. In those days, we witnessed the exit and emotional behavior of shareholders, but market conditions, that is, legal protection of the market, caused the sales queues to gather quickly. In other words, the influx of heavy liquidity into the stock market helped maintain the market. It is surprising why, despite this experience, market factors are considered in a one-dimensional way for the current situation?
*** Why are the current conditions of the stock market different from the conditions of January last year?
With this liquidity and this situation of distrust, we will see erosive fluctuations in the short term until liquidity is injected into the market. Liquidity in the market is low and due to the lack of movement of large stocks, it has tended towards smaller stocks. But the question is why the current situation is different from the situation in January last year? At that time, the stock market had not yet turned red for the real people and the positive expectations from the stock market were in a favorable condition. But in the current situation, the amount of liquidity that has been removed from society has taken away the courage to support the market and trust it. And it is unlikely that the stock market will be able to grow rapidly in the next six months.
*** Iran Stock Exchange is the first martyr of the economy this year
Unfortunately, the stock exchange was completely innocently removed from the public trust, and the Iranian stock exchange was practically the first martyr of the economy this year. At a time when many markets were in a state of excitement, the stock market sucked everyone out and experienced a free fall. Certainly, if the stock market was in the forefront, we would have developed SME, start-up, derivative, futures, etc. markets by now, how many new tools could be added to the market, and how much a new container could be used to attract liquidity.
*** The stock market was destroyed at the peak
Unfortunately, the economic and commercial size of the stock market was destroyed at the peak. Many projects changed their scenarios before they went public. Many big projects could be easily defined in the stock market, but due to the frozen and old thinking, instead of taking advantage of opportunities, the back of the stock market was destroyed for fear of a price bubble. Economic development requires a lot of infrastructure, but the most important factor that is considered as a beacon for the economy is development-oriented thinking that the stock market is one of the best places to start and spread this thinking in the economy.
*** Temporary admission of the government to the stock exchange
Although we do not agree at all with the government’s intervention in the markets, but due to the high volume of sales of legal entities, which are often considered as part of the government, the government in the current situation to compensate, must enter the stock market and get the market out of this situation. The stock market has gone through days when some people are talking about the 900,000 index. These negative signals can push the capital market back a year. The government must mobilize its power to support the market as soon as possible, otherwise this small amount of market liquidity will go to the cryptocurrency market and other markets that are speculative.
*** The wrong way of government
The view of the people of society and even the world has turned away from the fundamental indicators of a share or a market. The world is in a situation where people have moved to quick-return markets due to the heavy losses they have suffered from the Corona epidemic, and this has led to panzing and fraud in some markets that people are rushing to seek. Maintain the value of your money and be aware of the shortcomings caused by the poor economic situation. But the Iranian government unfortunately took the wrong path at a strategic juncture. Government Instead of using the attractiveness of the capital market to attract stray liquidity and direct it to the productive sectors, it suppressed demand in order to prevent the formation of a bubble.
*** The reason for the popularity of cryptocurrencies
For the first time in the Iranian market, we witnessed the days when people restricted buying and selling and trading dollars and currencies and trusted the stock exchange, but unfortunately, the real selling behavior hit the people hard who entered the stock exchange with a thousand wishes and planning. Today’s lock on the capital market is due to the fear of repeating these days. Otherwise, the stray money in the society is enough to bring the excitement of the stock market back to June and July of this year. Why do you think cryptocurrencies are so popular in the world? Currency cryptocurrencies have sometimes recorded returns of up to 1,000 percent in recent months. This means understanding the space for growth and development.
*** Changing the world’s view of financial and capital markets
This is a real example of the change in the world’s view of investment, especially participation in financial and capital markets. People invest with a model of development and growth, and we are in a situation where the capital market does not fit into this framework at all. To better understand the stock market complication, we offer an example at your service, dear ones. An example of marketing a stock exchange gift is meeting the first refining share.
*** What happened to the first refinery?
In October and November of this year, the government strongly advertised on the First Refinery Fund, and we saw that even at certain times, the government was not willing to sell this share to the people. But it happened anyway. But unfortunately after A positive day after a long wait for the reopening of the intrinsic value of this symbol dropped to 50%. So the question is, does it really remain an incentive for a newcomer? But what was the result? Ten days ago, when the share of the first refinery finally reached the tipping point with the support of the public sector, we saw that a large number of shareholders sold the share at the tipping point, and the ascent process was practically stopped.
Regarding P / E and expectations for future profits, hours can be analyzed and a specific P / E number for a market can never be reached. Do not see the growing market as a bubble. It is in these growths that new corporations are created, national projects and large corporations are created. People are encouraged to participate in the underwriting of new companies and to increase the capital of existing companies. The stock market is the showcase of the economy, and as long as you show the ugliness in this showcase, no one is willing to invest in other sectors of the economy, empty capacities will not be financed, and finally one day you will see that capitals will choose another growing market.
*** Technical issues of the stock market
But so far, we have talked about behavioral factors in the Tehran Stock Exchange. Perhaps it is not bad to talk a few lines about the technical issues of the stock exchange. The range of asymmetric fluctuations is one of the good steps to change the mindset of traders. Since the trust in the stock market has been damaged and the mentality of traders has been disturbed, we must restore this trust and improve the investment perspective in the stock market. But in addition to changing the scope of trading, we must also pay attention to side issues. In a situation where the psychological atmosphere is disturbed, the government, as the main player in the stock market, must inject liquidity into the market in order to restore confidence in the stock market.
*** Remove ambiguity and create incentives in the field of macro and micro investment
But at the end of the year, the government is involved in paying employees’ salaries, and according to itself, the government will absorb part of its revenues from the capital market. Compare it to an oscillator. This mentality must be removed from the government in order to be able to play its role as the main policy maker of the stock market. Ambiguity and incentives in the two areas of macro-investment (at the scale of industry and legal entities active in the primary market) and micro-investment (real and legal in the stock market and the secondary market) should be best done.
I hope that the necessary liquidity will be injected into the stock market and the value of trades will be higher than the current amount. Otherwise, we will see a new model and erosion of fluctuations in the stock market, which will drastically reduce the value of trades for a few days and lock the sales queues. And we will be selling in a few days. That is, if liquidity is not injected into the stock market, the oscillation time will be so-called “stretch” and will be more erosive and longer.
*** Government policies in the last days
Since the structure of Iran’s economy is inflationary, it is likely that with the approval of the new budget bill, many markets that are of a sustainable nature will start the process of increasing prices from March. As we have seen in recent days, the price of the dollar, with its cross-sectional rise, raised the final rate of car prices and increased the price of domestic cars by about 7%. If this situation continues, the government should support expansionary policies and inject money into the market so that at least the purchasing power of the people is strengthened a little and the wheel of development moves.
If the government seeks to curb inflation by improving its performance reports at the end of the presidency, it is likely that the capital market will continue to fluctuate until the middle of next year, with at least no significant growth prospects. .
The beard and scissors are currently in the hands of the government and can save the capital market from this uncertainty. In such a situation, the idea of a decrease in the dollar exchange rate is far from expected, and according to the decisions taken by the government with the gradual elimination of the half-dollar, the dollar is likely to fall in these prices.It will be approved. Therefore, over time, we will see the balance of markets relative to each other, where the stock market will be in the spotlight again after the ups and downs.
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