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Code: 52213 Visited: 104 Publish Date: Oct 08 2018 - 2:53
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Capital Market
Emotional Behavior Disrupting the Markets
Tehran, Oct. 08 (SENA) - Following the unprecedented surge of the markets in the past couple of weeks, a new wave of investors turned to equity markets as the next investment destination. Due to their lack of experience, they are showing a herd mentality when faced with false news and rumors, causing the turbulence in the past few days.

Tehran, Oct. 08 (SENA) - Following the unprecedented surge of the markets in the past couple of weeks, a new wave of investors turned to equity markets as the next investment destination. Due to their lack of experience, they are showing a herd mentality when faced with false news and rumors, causing the turbulence in the past few days.

“Volatility is the nature of equity markets, but bear in mind that when prices are falling, investors should avoid emotional behavior and do not pay attention to the rumors,” Said Shapour Mohammadi, Chief Executive of SEO, in an interview with Shargh.

Mohamadi mentioned that in the current economic condition, the capital market could play an imperative role to control inflation and direct liquidity toward productive sectors.

Interviewer: Iran’s economy is struggling in fronts such as gold and currency markets and facing stagnation in real estate and manufacturing sectors. What can capital market possibly do to help the economy?

Mohamadi: capital markets are cornerstones in every developed economy. They could bring profit to small investments of the public and drive them to be used for industrial developments, so officials should consider the capital market in their macroeconomic decisions. Unfortunately, the level of awareness regarding the capital market is relatively low in Iran.

Interviewer: Issuance of fixed-income securities in the past two years disrupted the markets and for a while, their trading was halted. What measures have been taken to make markets more efficient?

Mohamadi: for one thing, the fixed-income instruments traded outside capital markets, which had high discount rates, were listed on the markets. This decreased their rate of return as low as 16%, providing cheaper financing for entities. Then SEO cut the trading commissions and tax, making markets more appealing. The tax on certain capital raises was also omitted. The most important development was the modification of regulations concerning the disclosure requirements by the companies, which led to more transparency and smother trading.

Interviewer: Oil minister announced the supply of crude oil in Iran Energy Exchange. What is the mechanism for this?

Mohamadi: It is worth mentioning first that providing and developing financial instruments to control economic shocks has been on SEO’s agenda in the past two years, including short selling, credit buying, put and call options, market making, and market stability fund. These instruments will provide and control liquidity in the markets. Regarding the trial supply of crude oil in Energy Exchange, SEO is collaborating with the parliament and the oil ministry. The essential infrastructure has been established.

 

 
By: Security and Exchange News Agency (SENA)
 
 
 
 
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