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Liquidity Flow Into Equity Market

Liquidity Flow Into Equity MarketLiquidity Flow Into Equity Market

Shareholders will gain more after international sanctions are lifted, as more liquidity will flow into the equity market in upcoming months, a market expert said.

“Shareholders will be more engaged in market deals when investment costs are reduced and the existing risks including political ones are mitigated,” Mohamamd Kafash Panjeh Shahi, managing director of Kala Sepehr Brokerage Co. said, as reported by SANA.

The political risks that were adversely affecting the market have receded with the recent nuclear framework agreement between Iran and the world powers, he said. “Banking and auto sectors as well as machinery and equipment manufacturers plunged into recession under sanctions, as banks had to pay extra costs for money transfer and the enterprises endured losses for importing raw materials at higher costs.”

The stock market, as the frontier of the economy with many companies operating inside, was also negatively affected while the falling prices for some shares did not have logical justifications. However, the concerns over the results of nuclear talks made the shareholders sell more than buy, he added.

The new agreement reached on April 2 in Switzerland over Iran’s nuclear energy program, , however, has stimulated shareholders to start buying, and this is a step forward for the stock market as it helps the shareholders gain, driving a second wave of liquidity to enter the equity market, Kafash said.

“The final agreement, set to be achieved by June 30, will ensure incremental yet huge growth for the stock market in the long run,” he predicted, adding that the increase in the number of transactions will also provide a chance for the shareholders to modify their portfolios.

In the meantime, lifting of sanctions and ensuing positive impacts coupled with lower interest rates will bring more profit to shareholders, directing investments towards the stock market.

Financialtribune.com