TEHRAN – Head of Iran’s Securities and Exchange Organization (SEO) Majid Eshqi, in a letter to First Vice President Mohammad Mokhber, has outlined eight major challenges that the Iranian stock market is currently facing, Tasnim news agency reported on Monday.

According to Eshqi, increasing interest rates which has resulted in the withdrawal of liquidity from the capital market, decreasing the profit margin of companies due to the increase in the prices of feed and energy carriers, dictated pricing of products, carrying out the transactions of National Iranian Oil Refining and Distribution Company (NIORDC) at the energy exchange, fluctuation in forex rate, transfer of shares in major auto companies, making decisions for export-oriented companies without considering macroeconomic consequences and cutting electricity in summer and gas shortage in winter are the major challenges impacting the performance of the stock market.

In this letter, Eshqi has also included some suggestions for managing uncertainties in the stock market.

Stabilizing bank interest rates, removing the European hub rate from the pricing formula of feed and fuel, eliminating dictated pricing, making the financial relations between the government and economic enterprises more transparent, and depositing the remaining resources allocated by the National Development Fund to the Market Stabilization Fund are some of the suggestions made by the SEO head for boosting the stock market performance.

Stock market analyst Mostafa Safari believes that global economic stagnation and inflation have negatively affected stock markets all around the world including the Iranian capital market.

According to Safari, the outlook, however, is positive for the next two years and the Iranian stock market is expected to get back on track and continue its upward trend within the next two years.

“It seems that for the next two years, we will see an upward trend in the capital market; Because some statistics show that the market follows a two-year pattern; it has been facing two years of recession from August 2019 to August 2022, now it is time for the market to experience two years of prosperity,” he explained.

The expert said the capital market needs political and economic stability for growth, which can be achieved by restoring the Joint Comprehensive Plan of Action (JCPOA).

“We should not expect the economic impact of the nuclear deal in the short term, and it may take more than a year for the positive effects to be manifested in the market,” he stressed.

EF/MA