Why is the index not a suitable measure for stock market growth?

According to Tejarat News, last Tuesday, the government spokesperson said that the stock market index has grown by 10% since the beginning of the year. But the capital market activists reacted to the issue and demanded the removal of the index.

At the beginning of his weekly press conference, Ali Bahadri Jahormi spoke about the capital market and 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.

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

Stock market lies to the people

Talking to Tejarat News, Amir Topchipour said about the protest of the capital market activists: The capital market has been in a difficult situation since August 2019, and during the past two years, the shareholders have faced many financial and psychological problems.

This capital market expert stated: The Rouhani government by encouraging people to enter the stock market and the president’s government lied to the shareholders by promising to improve the stock market situation and abused the feelings of the people who trusted the government’s promises. Still, after two years of this historic fall, nothing positive has happened in the capital market and no support for the stock market can be seen.

He added: In addition to the financial losses that many people faced with the stock market, we also witnessed emotional and psychological damage to the shareholders. One of the main reasons for these issues is misinformation about the market. For example, the government spokesman talks about “relative stability” in the capital market and calls for a 10% growth in the total index, which has reached its historic bottom in recent months.

Is the total index manipulated?

Topchipour continued: Currently, the Dara 1 fund, which was sold to the public by the government, is currently at its historical bottom and is not in a good condition. Various symbols in the market have undergone heavy corrections of more than 30% at the same time as the index grew by 10%, but the officials speak of “relative stability” in the capital market. Certainly, the total index of the Tehran Stock Exchange is not a suitable measure to measure the state of the capital market, and according to many market participants, some of the big symbols that have a great impact on the index are associated with manipulation, and this issue causes the index to be engineered and the use of this The benchmark creates misconceptions about the market.

Criticizing the government’s approach to the capital market, he said: “Unfortunately, the government does not have a positive approach to the capital market, and the central bank is also acting contrary to last year’s resolution, and the interbank interest rate is increasing day by day, and the consequences of these decisions in the market The capital is clearly visible, and contrary to the promises made, no support is seen for the stock market, and despite that, the government has faced many problems with the nightly laws of various stock market industries and put its hands in the shareholders’ pockets.

Topchipour finally stated: Capital market activists hope that the index of the entire stock market will be removed from the analysis and news as soon as possible and that a principled and correct criterion will be used to measure the market situation. Recently, in a survey, we saw that 93% of the experts are against measuring the market situation with the overall index, so the stock exchange organization, the stock exchange company and the over-the-counter company should take decisions in this regard as soon as possible.

Failure to match stock market growth with numbers

Javad Fallahian, a capital market expert, also said in this regard: the government spokesperson announced that the market grew by 10%, which has many contradictions with the reality of what is happening in the market. We have emphasized many times that the total index does not reflect the reality of the market. Practically, the purpose of this indicator that is currently displayed on the trading board. It is only the reports that are definitely presented by the organization to the upper managers, which has caused the reality of the market to not be displayed as it is.

He continued: indices are usually traded in all stock exchanges of the world. But what is happening in our stock market, a false and misleading index is presented that cannot be traded and only people who are analyzing it. Due to the fact that many experts emphasize that you should not analyze this index, people who analyze this index will make them take actions that will end up in losses for the market.

Deep losses for stockholders

Falahian explained: It does not show the market realities in the right way. We can see that the total index fell by a few percent compared to its ceiling, but several times that happened in stocks. What is displayed in people’s portfolio is in very bad condition. In these two years that started with the market collapse, this index is not dependent on the current time either.

This capital market expert explained: If in the past years 1993 and 1994, with the blocking that took place at that time. At the same time, Mr. Shapour Mohammadi, the head of the stock exchange organization at that time, announced that whoever blocks, I will deal with it, indexing is a thing of the past. It seems that this misleading factor of the market should be dealt with once and for all. If the stock exchange organization cannot replace a suitable index, the best action it can take is to remove it from the trading board for the time being. As a result, more than this, the shareholders and operators of this market should not suffer more losses, because the behavior of the index and the events that occur in the overall index also affect the entire market.