Stock market investors are always torn between whether to buy dollar stocks or non-dollar stocks. The dollar is one of the most effective influencing factors in Iran’s economy, and the stock market is also affected by this foreign currency. Therefore, if we get a complete understanding of dollar and non-dollar stocks, we can buy more confidently in the stock market. The shares of companies whose income is calculated based on dollars, or in other words, companies that are export oriented, the shares of such companies are called dollar shares. Riyal or non-dollar shares belong to those companies that sell their products in the domestic markets. In this article, we are going to check what dollar stocks are and tell you the difference between them and non-dollar stocks.
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What are dollar stocks?
Different companies from different industries are active in the stock market and have different nature such as manufacturing, trading and investment. Now, depending on each of these factors, some of them deal with foreign customers and foreign markets. Usually, such companies sell their products in foreign markets and their income is based on dollars, which is called export-oriented companies. In general, such companies spend most of their production costs in Rials and they receive currency in exchange for the sale of their products.
Another group of companies that get their daily raw materials and equipment from foreign countries, the shares of such companies are also in dollars. In the Islamic Republic of Iran, there are companies that are export-oriented, for example, companies that operate in the fields of refining, mining, metallurgy, and petrochemicals, have dollar-denominated stocks. Among the most famous symbols that exist in the dollar stock market of the stock exchange are Shabriz, Fakhor, Fars, Shepdis, Foulad, Shetran, etc. cited. To learn more about the stock market and its benefits, you can read the article What is the stock market?
What is meant by dollar shares?
The economic conditions of our country have always been accompanied by many tensions and fluctuations. Also, the dollar rate in the country’s market has had a significant impact, so that with the smallest changes in the rate of this currency, the prices of many goods change. Therefore, the value of shares of export-oriented companies increases as the dollar becomes more expensive than before, because they can sell their products at a higher price in foreign markets. In fact, changes in the price of the dollar will cause changes in the income costs and financial statements of companies, and it will be profitable for such companies.
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When should we start buying dollar stocks?
The price of the dollar changes freely based on some different events that happen in the world. But only the dollar price alone does not make companies profitable and increase their stock value. For example, if the price of the dollar increases, but global rates such as copper and steel decrease, it will not mean profit for the companies producing these products. The various conditions that we want to explain in the following are not the main conditions for having a positive effect on the shares of companies that have dollar shares, but they are not ineffective either. As it was said in the section on what is dollar stocks, the dollar rate fluctuates, to identify these fluctuations, you can read the fluctuation article.
- Political tensions
- War and strife between countries
- Existence of disruption in Iran’s currency system
- New plans of the central bank
What is rial stock?
According to the points in the section on what are dollar stocks, non-dollar or rial stocks are on the opposite side of dollar stocks. Some companies get their raw materials from domestic products. Most of these companies’ income is in Rials, as well as the materials they need for production are produced inside the country itself, therefore these companies have Rial or non-dollar shares.
These companies are not directly dependent on the dollar, but the changes in the dollar rate cause the price of their products to decrease or increase. It is true that these companies do not need much to receive or buy equipment from foreign countries. But due to the restrictions inside the country, they are forced to buy raw materials based on the dollar rate. Now, if the price of the dollar increases or decreases, the value of the shares of these companies will also increase or decrease.
Companies that operate in the fields of animal husbandry, agriculture and food, their main income is Rials. But to buy raw materials, they need to pay dollars, and the value and shares of such companies will also change based on the fluctuations of the dollar price. Among the most important companies that have rial shares, we can mention banks, automobiles, service offices, etc.
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Buy dollar stocks or non-dollar stocks
The answer to this question is difficult, because none of the companies is superior to the other in terms of revenue. The value of dollar or non-dollar shares of companies changes according to the dollar rate, because all these companies deal directly or indirectly with dollars. The main goal of every person from investing is to earn money and then preserve his capital, because your lost shares or capital will not be easily acquired. Therefore, if you intend to invest in dollar or non-dollar companies, companies that have dollar shares will be a better and wiser choice.
The stock market index in our country has a direct relationship with inflation and its growth rate, and this issue affects all industries in the stock market. If the dollar rate increases, the value of dollar stocks will definitely change more than non-dollar stocks, and its effect is naturally greater. But if the price of the dollar is decreasing, the input cost of non-dollar stock companies will also decrease and the shares of such companies will grow a little. To start investing, it is better to read books in this field. In this article, 7 of the best books to start investing are given for you, dear ones, that you can read.
In this article, we have explained what dollar stocks are and comprehensively reviewed dollar and non-dollar stocks. As it was said in the section of what is dollar stocks, this type of stocks has a direct relationship with the fluctuations of the dollar, and investing in export-oriented companies is a wise and better choice. If you are looking for more and more reliable profits in the stock market, buy dollar stocks.