By Mahnaz Abdi

Growth comes back to stock market, government’s support still needed

August 17, 2020 - 17:16

TEHRAN- TEDPIX, the main index of Tehran Stock Exchange (TSE), which is Iran’s major stock exchange, experienced a slight growth on Monday, after dropping for a couple of days. Gaining 2,000 points, the index closed the Monday trades at 1.815 million points.

Gaining 2,000 points, the index closed the Monday trades at 1.815 million points.

TEDPIX, which had experienced a two-percent drop in the past Iranian calendar week (ended on Friday), had been on a decreasing trend also in this week, as it fell 72,447 points on Saturday, and 88,000 points on Sunday.

The index had hit the record high of two million points on August 2, but closed at 1.975 million points in the previous week.

It had been experiencing an unprecedented trend of rising over the recent months, but experienced several days of drop in the past week, and it started the present week with a sharp decline as well.

Gaining 45,672 points on August 2, the TSE’s main index had stood at 2.007 million, notching up another outstanding record in the current Iranian calendar year (started on March 20).

It had hit the record high of 1.5 million points on June 30, and then it climbed half a million points in just one month to hit the record high of two million.

Iranian stock market, which had been experiencing some unprecedented growth in the past Iranian calendar year, continued its trend of growth during the present year as well.

It’s been a while that the capital market in Iran had been unbelievably flourishing; we have been witnessing new record highs continuously posted by the TSE since the year start, and climbing to the peak of one million points, something almost unbelievable just some time ago, came true in early May.

Such prosperous status of the capital market led to a highly absorbing of liquidity.

As announced by the head of Iran’s Securities and Exchange Organization (SEO), the amount of liquidity absorbed by Iran’s capital market reached 500 trillion rials (about $12 billion) during the first quarter of the current year (March 20-June 20).

Hasan Qalibaf-Asl said, “It is while the total amount of liquidity entered into this market stood at 300 trillion rials (about $7.14 billion) during the past year.”

But since the previous Iranian week, when the stock market experienced some trend of falling, the liquidity is being exited from this market, and some experts say that such exit of liquidity will increase the inflation rate.

Liquidity exit from capital market will increase the inflation rate

In an interview conducted by the Tasnim news agency on Sunday, Shayan Zahrakar, a capital market expert, said that when the liquidity is bringing out of the capital market, it will lead to higher inflation.

“Without the support of the government, it could not be expected that there will be again the long lines of investors for buying shares at the stock market and the money flowing from the parallel markets to the capital market”, he noted.

Government’s support can bring growth back to stock market

Majid Mohammad Alizadeh, another capital market expert, told IRNA in an interview on Monday that the government’s support can surely bring growth back to the stock market.

He also said that the investors should not expect jumping growth in the index like what occurred several times during the first two months of the current [Iranian calendar] year (March 20-May 20).

While the drops that the stock market has been experiencing in the recent days has created some concerns for the investors, the growth that TEDPIX experienced on Monday may remove some of the doubts and concerns that the market’s prosperous status is over.    

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