Results of a state TV poll on Tuesday show that the majority preferred to invest in the capital market.
Asked whether they want to invest in the capital market or foreign exchange market, 84% of participants said they have more trust in capital market brokerages than currency dealers.
The prime time TV program Payesh (Persian equivalent for monitor) discussed developments in the capital market and ways and means of investing in this market by newcomers, Tasnim News Agency reported.
Given the low returns on investment in the forex market compared to parallel markets, results of the poll were hardly surprising.
With bearish trends in the gold and forex markets, many investors seem disappointed about the prospects of putting their money in these markets and are increasingly turning to the capital market.
Reports say the stock market was undoubtedly the top performer in the first quarter of the current calendar year (March 21-June 20), with returns at or near 31%.
This is while the gold and forex markets respectively registered 1.4% and 2.4% returns during the 90 days.
What happened was large amounts of new liquidity flowed into the capital market, revitalizing the market with fresh blood.
A study by the Tehran Chamber of Commerce, Industries, Mines and Agriculture indicates that the value of equities traded in the stock market during the first two months of the current fiscal year registered a whopping 566.5% growth compared to the same period last year.
On the merits of investment in the capital market, the TV program guest, Muhammad No’ee pointed to the outstanding performance of the capital market, noting that the potential of the market for profit-making is comparatively higher.
“Many people believe that the interest banks pay on deposits is indeed a secure investment. However, this is not true simply because with currency rates rising, their money in the bank loses value.”
“This is while if they purchase shares in the Initial Public Offering they could reap profits of up to 700%,” he said.
Regarding profit-making capacity of the capital market over the past year, he gave an example of a capital market trader who had invested 10 million rials in an IPO at the beginning of the last year (March 2018), saying the value of purchased shares reached 75 million rials by the yearend.
Recalling that 27 manufacturing companies entered the stock market last year, he acknowledged that some of the companies may make subtle losses which could be offset against higher margins of bigger profit-making companies.
A recent review by the Securities and Exchange Organization indicates that by the end of third calendar month to June 21, the total market capitalization of Iran’s four bourses (Tehran Stock Exchange, Iran Fara Bourse, Iran Mercantile Exchange and Iran Energy Exchange) reached 12,282 trillion rials ($102.3 billion), indicating 106.5% rise compared to the corresponding period in the last fiscal year. TSE, alone contributed to 9,091 trillion rials ($75.7 billion) of the market cap.
