Economy, Business And Markets

Stock Market Drained by Enduring Ambiguities

Stock Market Drained by Enduring AmbiguitiesStock Market Drained by Enduring Ambiguities

More than 65 percent of companies listed at the Tehran Stock Exchange underperformed, and pushed the TEDPIX to notch a fresh retreat on Saturday trading.

The equity market is grabbing the headlines again, thanks to its increasingly volatile situation, which is mainly caused by grim economic outlook due to lingering sanctions on Iran’s nuclear energy program, systemic risks prevailing in listed industries and the unsettled investors’ emotional investing bias.

The Islamic State terrorist group is gaining grounds in Iraq and Syria, which exacerbates concerns in the region while all-embracing ambiguities regarding feedstock prices still slash expectations about refining and petrochemical industries, which constitute more than 50 percent of the equity market. Meanwhile, probable Dividend Per Share (DPS) still keeps weighing on investors. The credit crunch due to capital restraints, recession, and also global slowdown also keeps dragging the listed companies’ performance.

According to TSE data, the overall index staged a downtrend and slipped 275.8 points or 0.43 percent to end at 63,427.3. The first market index eked out 239.2 points or 0.52 percent to 45,836.4. The second market index was down 316.8 points or 0.24 percent to 130,424.2. The free float index tumbled 441.1 points or 0.6 percent to 72,711.4. The industry index notched down 128.8 points or 0.25 percent to stand at 52,197, and the blue-chip index plummeted 15 points or 0.51 percent to settle at 2,904.1.

More than 370 million shares changed hands in a red trading day, valued at about $22.38 million, with Bank Saderat and Mobin Petrochemical Company topping trade volume and value respectively.

The Mobile Telecommunications Company of Iran with the Price Earnings ratio of 3.7, and 10.66 points gave the biggest boost to the TEDPIX. Iran Transfo Corporation and Ghadir Investment Company with close to 8 and 6 points took the second and third place respectively.

Once again the banking sector witnessed selloff, which left the most negative impact on the benchmark. Bank Mellat with 48.37 points was the biggest market laggard. Bank Saderat, and Mapna Group with 37.54 and 26.87 points followed Bank Saderat.

The Islamic Republic of Iran Shipping Lines and oil refining companies also dragged down the TEDPIX to underscore the vulnerability of the TSE to market jitters and lingering concerns.

The recent negative adjustment of most of the companies at the equity market and dramatic undervaluation within the past 45 days have curbed the investors’ enthusiasm to shore up their portfolios, and also failed to entice new investors to such a bearish market.

Investors are keen to resort to safe havens, however, the TSE’s dented sentiment, despite its hidden potential is less likely to tempt investors to pump fresh inflows.

Transparent financial statements, state-of-the-art infrastructures, bright economic perspective, and the government’s full support are needed to convince the unsettled investors.

Severe sanctions that have hit various industries have dramatically hindered their performance, and slashed expectations about their profitability at least in the mid-run. Furthermore, lack of liquidity keeps squeezing the government.