Economy, Business And Markets

Losing Streak Keeps Dragging Down TEDPIX

Losing Streak Keeps Dragging Down TEDPIXLosing Streak Keeps Dragging Down TEDPIX

Most of the stocks at the Tehran Stock Exchange (TSE) underperformed in the week that ended April 22, to push the overall index to shed more than two percent, and register the second negative trading week since the beginning of the new Iranian calendar year (March 21).

The benchmark erased earlier gains it made within the past couple of weeks amid investors concern about the outlook of a comprehensive nuclear deal between Iran and the P5+1 and the unsettled sentiment prevailing at the equity market.

The TEDPIX slumped 1,510 points or 2.22 percent to end at 66,569.2. The first market index shed 1,079 points or 2.17 percent to stand at 47,863.6. The second market index fell 3,182 points or 2.34 percent to settle at 132,714.8. The free float index was down 1,474 points or 1.87 percent to 77,317.7. The industry index tumbled 1,252 points or 2.25 percent to end at 54,434.3. The financial index plunged 3,102 points or 2.08 percent to 146,267, and the blue-chip index also slipped 68 points or 2.13 percent to 3,098.7.

More than 9.17 billion shares changed hands within the five-trading days, valued at close to $381 million to post 75.6 and 30.5 points surge in trade volume and value respectively.

 Market Laggards

Regardless of the TSE’s most crucial systematic risk concerning the future of western sanctions, Iran’s equity market is still grappling with ambiguities in trades, oil price fluctuations, banking deposit rates, and the gloom hanging over the economy due to the global slowdown.

Insider trading has always been a dilemma for investors at stock market. Insiders always take the advantage of gaining a lot, while other investors have to cope with heavy losses. Stock market rumors are indicating that a newly listed company at the equity market, which was not expected to be high-yielding, shocked everyone, with up to 44 percent hike in its share value. Both individual and institutional investors did not prefer to pick Hormozgan Steel Company (HSC)’s shares during its Initial Public Offering (IPO) within the past few days, however, unexpected massive orders to garner the HSC shares, raised speculations about probable manipulation of share. Lack of transparency has always weighed on investors.

The gloom hanging over the economy’s prospect amid loitering sanctions, now and then slash investors expectations about stability at the equity market, which pushed investor to resort to scalping – taking advantage of small price discrepancies.

Market analysts recommend short-run approach in stock market, especially when it comes to deal with a market surrounded with systematic and unsystematic risks. To mitigate the inherent risk, investors are recommended to shore up portfolios, while observing diversification, and long-run approach toward the performance of listed companies at the stock market.

As the equity market is considered as a mirror of the economy, prudent policies by government, and the Securities and Exchange Organization (SEO)’s officials are needed to practically address the prevailing challenges.

Furthermore, Minister of Economic Affairs and Finance Ali Tayebnia recently announced that banking deposit rates will definitely be lowered, which is expected to give a boost to the equity market. However, in the case of Iranian banks a combination of bad lending practices, bad asset management, corruption and loans the government forced them to pay, sometimes, for profligate national projects have led to more than $60 billion of non-performing loans.

Moreover, investors shrugged off news on a possible two percent cut in deposit rates, and kept overreacting at the equity market. A concrete fiscal policy is needed to tackle the inflation, layoffs, and boost the production, which are essential to reinvigorate the economy.

Despite the fact that galloping inflation is gone, and fear about sever economic situation has dissipated, skeptical investors are still cautious, eying a final nuclear accord in a bid to mitigate the loss due to the irregular trading behavior at the stock market.