TEHRAN – A stock market analyst believes that the main index of the Tehran Stock Exchange (TEDPIX) is expected to follow an upward trend in the last month of the current Iranian calendar year (February 20-March 20).

“Now the stock market is in a good position for investment, and paying attention to the issues affecting the stock market can help in the improvement and prosperity of this market,” Majid Mohammad-Alizadeh told IRNA on Wednesday. 

He pointed to the recent fluctuations in the stock market and the factors affecting it, saying: “The lack of trust and confidence as well as the uncertainty of the investors in the capital market caused them to be more cautious and reduced their sense of risk-taking to a great extent which disrupted the upward trend of the stock market.”

According to the expert, rumors and false news, intrusive and non-expert comments, and numerous redundant bills passed by parliament have also contributed to the uncertainty in investors' decision-making.

Mohammad-Alizadeh further pointed to other influential factors in the withdrawal of liquidity from the stock market and said: “The attractiveness of parallel markets has also caused the withdrawal of liquidity from the stock market and has pushed investors towards parallel markets.”

“The combination of all these factors has caused the growth of the stock market index to slow down,” he said.

In late October 2022, Iran’s Securities and Exchange Organization (SEO) unveiled a comprehensive support package to encourage activities in the capital market as shareholders were getting reluctant to invest in the market.

One of the major measures considered in this package was the insurance of shareholders’ capital and dividends over the next year.

Insuring the shares of real entities, issuing subordinated warrants on shares of fixed income, injecting new resources into the market by sovereign funds to buy shares, depositing up to $130 million of the resources approved in the national budget bill for the Capital Market Development and Stabilization Fund, as well as direct and continuous coordination, supervision and monitoring of the legal entities active in the capital market, including companies and semi-governmental financial institutions, pension funds and military institutions were among the measures considered in the mentioned support package.

The package also stressed cooperation between the Central Bank of Iran (CBI) and the Ministry of Finance and Economic Affairs to manage the interest rates.

Increasing SEO’s direct investment in Capital Market Development and Stabilization Fund, limiting the activities of marketers, and suspending the underwriting of securities and initial offerings until further notice, were also among the issues considered in SEO’s support package.

Following this support package, the market started a modest upward trend in November and early December 2022, but the upward trend was once again hindered by various internal and external factors.

EF/MA