The anti-inflationary effect of the capital market for the country’s economy – Bursa Times

A capital market expert answered the question whether the capital market is a factor in creating inflation or not? He divided the capital market into debt and equity markets and told the Capital Market (Sena) news website: The government has made significant financing in the debt market and instead of borrowing from the central bank, it has purchased a significant portion of bonds and created Inflation has stopped in the country.

Regarding government financing in the debt market, Navid Qudousi added: If there was no active debt market in the country, financing from the capital market would not be possible on a large scale.

He explained about the development of the debt market and the contribution of the stock market to this market: At the same time as the capital market is booming, more people have appeared in this market and, considering the market conditions, are interested in investing their assets in fixed income bonds and/or There are fixed income funds and stocks.

He added: Considering the level of riskiness of the market, investors moved their assets due to the buoyancy, which led to the balance and prosperity of the market.

Pointing out that the prosperity of the stock market attracts more resources for investment, he said: the prosperity of the stock market, along with the development of financial institutions, causes the development of capital supply companies, investment funds, portfolio management companies, and the significant growth of resources at their disposal or assets. It follows them under management.

He clarified: When the resources under the management of financial institutions are significant, part of the assets will be spent on investing in the debt market and investing in fixed income bonds.

This expert stated: The aforementioned mechanism had a significant impact on the development of the debt market and help in financing, and this shows the anti-inflationary nature of the capital market in the country’s economy.

According to Qudousi; The development of the debt market will provide a financial basis for the capital market and will limit the process of creating inflation.

In another part of his speech, he mentioned the stock market as the second part of the capital market and said: The stock market is a part of the capital market that is divided into two primary and secondary markets.

He acknowledged about the primary market: In the primary market, new financing for companies is done in the form of initial offerings and/or capital increase from cash.

Qudousi stated: In the initial market, companies provide a part of their needed resources from the shareholders, and spend the obtained resources on development projects, and no matter how prosperous the capital market is, there will be scope for larger initial offerings.

He further mentioned the capital increase mechanism as the second part of the primary market and said: one of the capital increase mechanism is cash, so that the more prosperous the market is, the more welcome the capital increase is and the related funds The right of pre-emption can provide more benefits and spend on development projects.

This capital market expert added: In the primary market, the resources of small shareholders are transferred to major shareholders and the collected resources are spent on development projects, and this strengthens the supply sector and shows the anti-inflationary effect of the capital market.

Referring to the secondary market, he said: The secondary market is where financial instruments such as debt securities and shares are already issued and bought and sold, and investors buy the securities from other investors instead of the issuing company. they do.

Qudousi added: the volume of transactions in the secondary market is much higher than the primary market; Because this market was created with the purpose of trading bonds issued in the primary market and increasing their liquidity.

He pointed out: Undoubtedly, the prosperity of the secondary market has important effects on the debt market and the primary market, and when the secondary market is dynamic, the debt market is developed and the ground for larger primary offerings with financing from the capital increase and cash flow. will be provided.

* Correspondent: Parvin Khodadadi

Published by: Samad Yousefi