Is it reasonable to remove the total index? / What is the right alternative?

According to Tejarat News, Ali Bahadri Jahormi spoke about the capital market yesterday at the beginning of his weekly press conference, and he believed that the total index of the stock market has grown by 10% since the beginning of the 13th government, which means that the stock market is stable.

This official further stated that the government does not look down on the stock market. One of the serious policies of the government is that shareholders’ dividends were paid with follow-ups. More than 4 thousand billion rials have been distributed.

The stock market activists reacted to these statements of the government spokesperson and said that the total index of the stock market is fake.

On the other hand, activists and experts of the capital market called for a total Bor index with a campaign yesterday.

Payam Elias Kordi, one of the capital market experts who objected to the government spokesperson’s words, told Tejarat News: Markets have a chart that shows the state of the market. We have been protesting for a long time that the total index cannot show the state of the market. For example, there were days when the stock market was extremely negative and the number of negative symbols in the market was extremely high, the overall index did not show the negative trend as well. Or worse, some days the market was negative, but the overall index was positive.

The index does not show the whole stock market situation!

He further said: In the reports that are given, both in the previous government and in the new government, the most important index is shown. If the total index is not really an indicator of the market situation.

Referring to the speech of the government spokesman, Elias Kordi said: I object to the speech of the government spokesman. The formula and calculation basis of the indicator has problems, which is a matter of separation. We believe that indexing is also done with a series of groups on certain days and you know that every time the authorities want to talk about the stock market. They do not talk about the state of the market and the approvals, the word total index appears in the news, it is heard in the parliament, it comes out in the language of the government spokesperson, and this causes the total index to increase more and more.

This capital market expert explained: We have discussed the total index several times. You think that if we leave this argument aside that the index is being misused. The appropriate criterion for obtaining the overall market rate of the index can be equal weight.

He continued: If we are going to do an expert work so that we don’t have to remove or change it again tomorrow, we can create a working group of market participants, investment funds, portfolio managers, brokers and even active code experts. They make a decision and present a proposal to the organization and implement it.

Is the equal weight index the basis?

Elias Kordi stated: Now our issue is not whether the number is high or low, it is the correct index. We have to look at the whole market and the equal weight index can be very good. But in the American stock market, when they want to report, they consider their large market shares as a basis in all industries. For example, they say that the basis of how Biden’s performance was in the American stock market. They look at their overall market, they say that in the past month, the overall market was negative and we have had such conditions, but we know that with a group, for example, an automobile group or a metal group, they easily increase and decrease the index, and until then, the expert team is formed. Don’t take it, we can’t talk about anything else.

He explained: We have added the cash profit of the index from the series on which we have based the index. There have been some investment companies that we’ve counted twice, resulting in the wrong number. That is, when we compare its growth, its growth is wrong. For example, when companies distribute cash dividends to their shareholders, this process may take 8 months, but it has an effect on the index the very next day.

This capital market expert finally said: This is why we should encourage people to invest indirectly, our portfolio managers are one of the criteria they show to the client. How much they are ahead or behind the index, they also have problems, that is, they also do not have a correct criterion. The index is a false base not only for small shareholders, but also for asset managers who have very high assets under their management and are people with a long history.

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