TEHRAN, Iran, Aug.18
Trend:
Recent decline in Iran stock index and trading is not serious and it is not expected to continue in the long run, stock market expert Hossein Khazali told Trend in an interview.
"In my opinion, stock exchange is like a mountain climber; if he goes up a mountain too fast, he will definitely get tired soon, and if he continues to climb he may die. The stock exchange growth had tripled in past five months and its value increased to almost $1.9 billion; the statistics show trading volume has increased fast comparing to the market value in recent months, so the stock exchange certainly needs to rest, even if this implies negative index," he said.
"If it's not happening, it is possible that the exchange will crash, which will increase the risk of further declines; however, when index has fluctuation, the slope will not be intense, so when some investors leave the trading, other investors may come," the expert said.
"The stock exchange has grown seven times throughout last Iranian year (started March 21, 2019), while in last five months, it has increased three times, so we shall not worry about possible crisis just because of several days of negative index in the market," he added.
Khazali went on to say: "Exchange traded funds (ETF) are government shares in big companies that are no longer considered as public entities. There was no problem in trading of these shares worth $7.1 billion in the market in last week; some days ago, the stock queued order was $2.8 billion, and it was the best chance for purchases."
"The decision of Iranian Privatization Organization and Oil Ministry to offer refinery shares via the second exchange traded fund raised concern among investors and although it was not approved, the stock started to drop and the stock symbols were positive on Monday trading," he said.
"I do not see a serious problem in the market. When the market becomes positive, the liquidity flows; however, stock offering should be supplied according to the liquidity, otherwise index and prices will increase as it has happened in recent months that led to stock exchange growth. Stock market depth increases by more share offering and not due to the increase of prices or index," Hossein Khazali concluded.
Iranian Privatization Organization (IPO) has recently announced that government's stakes in four refineries will be put on offer through the second state-controlled exchange traded fund in the near future.
The assets include the government’s remaining stakes in Tehran Oil Refining Company, Esfahan Oil Refining Company, Tabriz Oil Refining Company and Bandar Abbas Oil Refining Company. The government owns 20% of shares in each refinery.
The new ETF, dubbed as “Oil Refinery Industries”, is expected to debut around August 21, IPO announced on their website.