The market saw a highly rewarding week with daily gains of above 3% on average amid professional investors and market analysts’ worries about what lies ahead and growing enthusiasm by novice investors to get a slice of the growing pie.
Commodity stocks and shares of banks and auto companies were the main drivers of the rallies in the past two weeks despite collapsing international oil prices and a prolonged downturn in the base metal market.
According to the Donyaye Bourse website, the key factor boosting the stock market is not the earnings of listed companies, but the flood of liquidity from the unusually growing number of investors.
Worried about the strange growth in market indicators, Fardin Aqabozorgi, a stock market broker, warned that share prices will undergo a major correction in the near future.
He reckoned a combination of huge losses incurred on businesses due to coronavirus and mounting restrictions on foreign trade due to the US sanctions, as factors threatening the economy, and by extension, the performance of listed companies, Bourse Press reported.
Surge in foreign currency prices against the rial is another major factor pushing the stock market up. Besides creating inflationary expectations, the soaring value of the dollar could help export-oriented listed companies earn more when their earnings are converted into rials.