Daily analyses reasons behind stock market collapse

Tehran, Dec 17, IRNA - An English-language paper analysing the reasons behind the collapse in Tehran Stock Exchange (TSE) suggested short-term plans can help remedy bouts of economic problems. However, 'Iran Daily' underscored that decision-makers, both in the legislature and government, should promote greater transparency in investment sectors, which will culminate in long-term economic prosperity. Calling the collapse in the TSE as 'weird', the daily in its Opinion column (pg 4) enumerated the following reasons for the plunge: Firstly, the failure of nuclear talks with world powers in meeting expectations, as Iran and P5+1 (permanent members of UN Security Council plus Germany) extended talks beyond the November 24 deadline, dampened enthusiasm in TSE. Secondly, crude prices have tumbled in the last few weeks, which led to the drastic decline in stock market index. Moreover, the contractionary fiscal policy pursued in the draft budget bill for the next fiscal year (to start March 21, 2015) also affected the capital market. Furthermore, the uncertainty facing privatization, establishment of refineries and taxation impacted the bourse. In addition, the short- and long-term monetary policies devised by the administration also played a role, while the recession prevailing from the approaches adopted by the ex-government (2005-13) contributed to the decline. The repercussions of mismanagement under former president Mahmoud Ahmadinejad and lack of sufficient cohesion in the current administration have hindered efforts to fully overcome recession, underscored the paper. Even though President Hassan Rouhani’s government spares no efforts to curb the downturn, its remarkable achievements are mainly in oil and auto industries, it noted. It is a fallacy that the replacement of managerial portfolios in the stock market might provide the much-needed fillip. This is because the current team heading the stock market has had a satisfactory performance in promoting clarity, introducing new mechanisms and developing qualitative and quantitative methods. If the administration focuses all-out efforts on refineries and presses ahead with ambiguous approaches in other sectors, investors will be reluctant to inject capital in the stock market, it stressed. Refineries are valuable assets, but the administration should not adopt ambiguous policies vis-à-vis setting the gas price for petrochemical complexes, transferring the shares of major companies and repaying deferred liabilities, particularly arrears to certain ministries./end