Why does the stock market not grow with inflation?

According to Tejarat News, the stock market has grown by about 11% since the beginning of the year. Many experts believe that the stock market should grow more than this, and this growth is low in the face of inflation. Why is the stock market growth low?

Peyman Molavi, an economist, says in an interview with Tejarat News: From August 2009 until the fall of the stock market in 1399, the index has grown by about 657%. Has inflation been 200 to 300 during this period? This is not the case and inflation has been around 40% at the time.

He explains: The reason for this was the sharp decline in interbank interest rates from 18% on April 1 to 8% in June 2016. The reduction in interbank interest rates eventually caused an explosion and the movement of investments towards the stock market. After June to October, the interbank interest rate reached 20%. If we put all these components together, we can say that the stock market is in line with Inflation moves.

This economist continues: Currently the stock market growth relative to Inflation Is slow. The reason for this slowness is the previous growth and lack of tools in 1399 in the market. The interbank interest rate will now be close to 21 percent and the bond rate will be 22 to 24 percent in the next few years.

Rumi states: By putting these components together, a rational shareholder can conclude that the stock market will grow sooner or later and must enter the market with a cane. On the other hand, it is strategizing many profit-oriented market professions and pursuing a kind of dividend policy of companies.

Referring to Borjam’s negotiations, he says: “Borjam has been in fear and hope for a year and the policymaker does not specify the task.” Therefore, the policy of most of the shareholders this year is based on dividends, and if the status of Borjam is determined, the policy of these people will also change.

How much is inflation?

According to the April report, the rate Inflation It reached 39.2% annually for households. Compared to the same information in the previous month, it shows a decrease of one percent.

Also, the annual inflation rate for urban and rural households was 38.7% and 40.6%, respectively, which decreased by 1% for urban households and by 7.1% for rural households.

The point-to-point inflation rate (change of the index compared to the same period of the previous year) reached 35.6% in April 2014. Compared to March last year, it has increased by 0.9 percent.

The point inflation rate of the main group of “food, beverages and tobacco” increased by 2.7 percent to 48.4 percent and the group of “non-food goods and services” decreased by one percent to 1.8 percent.

The monthly inflation rate also increased in April, reaching 3.3 percent, which is a two percent increase compared to the previous month.

Monthly inflation for the major groups of “food, beverages and tobacco” and “non-food goods and services” was 4.8 percent and 3.5 percent, respectively.