Deliberate fall of the stock market/capital market has no custodian! – Tejarat News

According to Tejarat News, Tehran Stock Exchange has become a place of mistrust among loyal investors these days. The successive falls of the stock market, which started in the middle of May, have increased the suspicion of index manipulation, the access of special codes to information rent, the government’s interference in the course of the stock market, and such things.

On the other hand, these days, the stock market has become a victim of the government’s budget deficit, and the shock of the President’s government’s interference in favor of industries has increased the risk of investing in this market. Homan Omidi, capital market analyst, in an interview with Tejarat News, has examined the current state of the capital market and the path ahead, which you can read below.

Factors causing the crisis in the stock market

It seems that the stock market is in a critical situation these days; What do you know as the main cause of such a situation?

The most important problem of the market right now is that it does not have a guardian! The men who sit in the stock exchange organization made promises to the shareholders about the market, none of which came true. It was supposed to not make unprofessional and arbitrary decisions for the market, which unfortunately was made!

In these cases, shouldn’t the regulator appear in the role of market moderator with the help of his tools?

Where is the market stabilization fund now and what does it do? Using the resources of this fund, for example, when the total index fell to the range of 1.8 million units, is not a support. In this range, their shareholders will definitely buy.

If there is an intention to grow and increase market liquidity, confidence must be injected into the market. The portfolio of shareholders of famous banks has fallen by more than 30%. This issue can be generalized to the whole market. Market makers in other groups also only buy in the negatives. Buying a market mover on the negative side of the swing range means that the market still has to continue the correction process. This is the wrong hint they are giving to the market.

Can we expect that whenever the market enters a correction phase after a rapid growth, the fund with a fatherly role will buy the market and bring it back to the upward track?

By studying the pillars and nature of this fund, we find out that it is built for this purpose. In addition, a large part of the source of the fund is the money of the market itself, which is stored in this fund. The purpose of the stabilization fund is that whenever the market faces a challenge, the resources of large companies that are paid into this fund will be used to support the market. This fund is not supposed to fluctuate from the market or challenge the market!

In fact, the valve is a safety valve to support the market when the panic phase occurs and the stock market is falling for no fundamental reason. The good reports published by the companies confirm the good condition of the companies. But lack of trust in the way of stock market management has caused this situation.

Is the collapse of the capital market intentional?

Since the 17th of May this year, the Tehran Stock Exchange has been on a downward path from which it seems that it cannot return. Some consider this fall or at least the creation of its factors to be intentional; Do you think this statement is true?

The recent drop appears to be intentional. That is, the hidden hand of the market, which is always talked about, has created stagnation and correction in the parallel markets and the stock market. Attracting resources to fixed income funds, to banks and contractionary policies and such decisions have caused a deep correction of stock market indicators.

Although the year 1402 has been called production growth and inflation control, the capital market does not follow any of these goals, and the root of this issue is the adoption of decisive policies.

Can other factors be identified in creating the current situation for the stock market?

In fact, the other issue of the market is the instability in the whole economic process that has happened at the moment. Our task with the budget deficit and the government’s policy to compensate for this deficit is not yet clear. One day the hand of the government is in the pockets of petrochemical companies, the next days are full of approval and denial of the resolutions. Another day, the issue of the supply of high-volume cars will be denied! This process includes all industries. The most recent example is the export duties of metallic and non-metallic ores, whose tariffs have been set with an ill-considered view.

Given that you mentioned the existence of problems in the entire economic processes, can we conclude that we will see the same situation in other markets?

In general, we took the factors that should help the market from the market, and on the other hand, the small amount of money and credit that was available in the market was also taken from it. The stock price is returning to the prices of the last three years. This is despite the fact that we do not see such a trend in parallel markets such as property. There may be a recession in other markets, but not a collapse in prices.

Hostage in the stock market?

It seems that this time the fall of the whole index is of a different type, and that is why many hypotheses are proposed about its factors and reasons. Is the hypothesis of cascading sales of some codes true?

In the last two and a half months, the total index has experienced a drop of more than 500 thousand units. Meanwhile, during the historical fall of the stock market in 1999, which lasted until the middle of 1401, the stock market index experienced a drop of 900,000 units. That is, this rapid reform is due to the conflicts and mismanagement that happened.

Some activists’ analysis of the recent reform, which can be probable, points out that after the non-disclosure of information on May 17, some people have taken the market hostage for this issue and are selling whatever legal and real shares they have. This analysis is not considered wrong, but it should not be given too much weight.

The market is very attractive at these prices and the fundamental conditions of the shares are very good, but unfortunately, the elements of trust and stability are missing these market days. Also, the one who exists as a regulator and custodian of the market, instead of improving the situation of the industries and his consultations with the government body in order to strengthen the production, has become an observer.

The government interferes with the income of companies after recognizing the profit!

Some people of the capital market believe that the good reports of the companies were anticipated in the upward phase of the market; At that point, the market was expecting the fundamental growth of the industries and because of that, it went up well. Is the growth of profitability of companies not included in the upward phase of the market that lasted from the end of Bahman reform to the middle of May?

Even accepting this scenario, the quarterly reports of the companies related to their performance in the spring of this year are being published, which shows the growth of the companies’ profitability. Also, the capital increase of companies, which is mostly from the place of accumulated profit and revaluation, has also come to Kodal, which is considered as one of the positive news of the market. On the other hand, companies have a good preferential scheme.

However, the assumptions of the industries are changing because the policy maker has noticed the profit making of the companies. But it is not supposed to reach into their pockets because the situation of the companies has improved a little. The politician expects to pay taxes and cut off their gas and electricity. Also, in recent years, companies have paid the country’s heavy inflationary costs, and on the other hand, the surplus profit that remains for them is taken from them due to price changes.

While there is always a warning about the government’s interference and tampering for the benefit of industries, this approach has become a continuous process. Why is there no fundamental thought to stop this approach?

In fact, this performance contradicts the macro policies and goals and even the promises of the officials. Part of it is due to the bad performance of the marketers and the market stabilization fund, and the other part is the silence of the regulator, who has the duty to fight every day for the rights of the shareholders, consult to improve the production conditions of the industries, but has taken a passive seclusion in the corner. Part of it comes back to the emotional behavior of shareholders who are in losses. It should be noted that this loss is not caused by a mistake in investment.

The way to save the capital market

What is the condition of capital market return? With the current trend, what destination will the market face?

A critical and urgent action is needed regarding the market conditions. including the policies of the market stabilization fund, which needs fundamental change. On the other hand, the way and framework of stock market management should be changed. The behavior and procedure followed in stock market management is not market management, but will only lead to creating fear in the market sentiment.

The current situation is such that the market operator places a purchase order on the negative side of the range, and the shareholders sell in the hope of buying 30-40%. Finally, we will reach a situation where the marketer’s resources are nearing their end and their finished price is high. On the other hand, stocks have also experienced a 40-50% drop, and in the end, everyone has suffered. This is what we will witness soon if the current practice continues

The role of the central bank in determining the direction of the stock market

What is the position of the interest rate in this? Does the central bank play a role in showing the fall of the Tehran Stock Exchange with its policies?

Currently, the interest rate is not controlled by the central bank and we see its increase week by week. This increase in interest rates has affected the average P/E of the market. A large set of factors and events have come together to make this fall happen only in the capital market.

For example, we do not see anything special in the real estate market. Also, in the transactions of Ferdowsi Square, the American banknote fluctuates in numbers lower than 50 thousand tomans. On the other hand, the situation of commodities in the world market is also favorable. Therefore, it can be seen that the fundamental factors of the market are suitable, but the element of trust in the market has been lost due to several reasons that we have examined.

It should be noted that today the stock market indicator recorded a drop of more than 64,000 units amounting to 3.2%. In this way, the total index lost the level of two million units today and reached a height of 1.9 million.

Of course, this drop was not specific to index makers and the equal weight index, which represents small and medium-sized companies in the market, fell by more than 20,000 units and lost the level of 700,000 units.

Stock market analysts believe that these falls are the result of the government’s wrong and unprofessional policies in recent months and insisting on their implementation. The market’s perception of the government’s behavior has been that the policymaker intends to make up for his budgeting error by any means possible; Accordingly, it doesn’t matter to him how deadly the policy of interfering with the profits of industries can be!