Capital market experts discussed the outlook for asset markets until the end of the year in the fifty-sixth meeting of "Critique and Opinion." In this meeting, inflation, liquidity, exchange rates, political risks, and corporate profitability were identified as the most important influencing factors on the markets.
The Role of Profitability and Political Risks
Hosseini Abdeh-Tabrizi, a professor of financial economics, introduced corporate profitability as the main compass of the stock market. He stated that an increase in the exchange rate in inflationary conditions can boost the revenue and profits of companies in rials. However, he emphasized that stock price growth must be supported by corporate profitability.
Ali Rahmani, former CEO of the Tehran Stock Exchange, pointed to political risks and export restrictions as key factors. He clarified that the continuation of these restrictions could impact export-oriented industries such as steel, petrochemicals, and mining.
The Stock Market Trend and the Effects of Liquidity
Abdeh-Tabrizi further noted the significant growth of the stock market after the initial decline due to the war, stating that the stock market has now outperformed the dollar. However, the market's P/E ratio has increased from about 5.8 to over 9, indicating that part of the expectations regarding future profits and inflation has been priced into the stock prices.
He also warned that continued rapid growth of the stock market without a corresponding increase in corporate profits would be difficult, and as the path continues, the performance differences among industries and companies will become more apparent. Seyed Babak Ebrahimi, a capital market activist, also mentioned liquidity growth and persistent inflation as important factors for the nominal growth of asset prices.
According to the statistics presented in this meeting, liquidity in Esfand 1404 has increased by 52 percent compared to the same period last year. Rahmani also referred to the rise in government expenses and pressure on tax revenues, suggesting the possibility of intensified inflation in the second half of the year. He stated that under such conditions, the stock market still has opportunities, but gold may record higher returns at certain points.
The Housing Market and Political Openings
Abdeh-Tabrizi discussed the housing market, stating that this market reacts with a delay compared to the dollar and the stock market due to price stickiness. According to the figures presented in the meeting, the average price per square meter of housing in Tehran has reached about 274 million tomans. However, he emphasized that the dollar price of housing has not significantly increased compared to previous years, and the low purchasing power of households has kept consumer demand in the market weak.
Experts in the final part of the meeting considered political and economic openings as one of the most important factors in changing the direction of the markets. If currency, export, and banking restrictions are reduced, lowering trade costs and the introduction of new technologies could impact the profitability of industries and the capital market. Conversely, the continuation of sanctions, export restrictions, energy imbalance, and rising government costs were cited as the most significant risks facing the economy and asset markets.
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