By Farhad Daneshvar- Trend
Although the main index of the Tehran Stock Exchange (TSE) saw a considerable surge in 2017, the market’s unweighted index suggests that the companies with the largest capitalization were behind the upward trend.
"Commodity-driven companies have a direct impact on the Tehran Stock Exchange, therefore the price hike in the commodities impacts the market in general," Alireza Kadivar, the CEO of T.M. Mellat Investment Company, told Trend.
While the global price of copper surpassed $7,200 per ton, about 35 percent up compared to six months ago, oil has reached its strongest level in three years with the Brent topping $68 a barrel for the first time since 2015.
In the meantime, the prices of aluminum, zinc and lead respectively hiked by 34 percent, 24 percent and 28 percent.
In total the commodity-driven companies alongside with refineries respectively saw a growth of 75 percent and 62 percent in 2017.
This is while the value of US dollar against the Iranian rial has increased by nine percent which hugely benefited the commodity-driven companies in the stock exchange.
"Considering the fact that a capitalization-weighted index or equal-weighted index is a type of market index with individual components that are weighted according to their total market capitalization, it becomes clear that the large price moves in commodity-driven companies, the largest components of the TSE, had a significant effect on the value of the index"
The low volume of trades is another factor questioning the capability of the main index of the TSE, equal-weighted index, to portrait the overall behavior of the market.
The main index of the TSE saw a brilliant performance over the last year, experiencing a return of 20 percent.
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