News ID: 156362
Published: 0707 GMT August 06, 2016

Recent growth in stock market

Recent growth in stock market

By Hamid Mir Moeini

Two variables have contributed to the recent surge in Iran's stock market. The first variable pertains to fundamental components. The significant growth in the bourse sector has been observed in refining and mining industries.

Mining industries have experienced a 10- to 15-percent growth in indices as prices of heavy metals increased across the globe. The support of Oil Ministry and other relevant bodies have also played a key role in boosting refining industries in the bourse sector. These are the components which have helped the market rally over the past month.

Meanwhile, there are different points of view about the impact of the government's recent decision to instruct banks to cut interest rates on deposits. The move has not had a significant impact on the stock market. This is because risks of investing in the bourse sector still remain high. Hence, officials should think about lowering such risks.

Besides, the impacts of reducing interest rates on bank deposits cannot be felt in the short term. As a result, we need to wait to assess their impacts on the stock market.

Nonetheless, no one can categorically deny the role of such impacts.

Another variable which has led to the recent surge of stocks pertains to controlling indices by officials in the bourse sector.

Share prices continued their downward trend until a month ago which plunged the stock market into disarray. However, officials in the stock market controlled parts of transactions and indices which helped the bourse sector grow. These measures are based on special justifications but they are not the proper approach to regulate the market.

Elimination of such interference will provide greater transparency in the capital market. This will help stock market investors and economic actors to reliably predict developments in the bourse sector and arrive at due decisions.

   
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