Stocks on Tehran Stock Exchange ended the week 4.7% higher in the market’s fourth consecutive week of gains, bringing equities to their highest in nearly 23 months.
Trading kicked off on Saturday with a 73,977-point open. Shares edged down for the day but swung back into gains on Sunday. Market gains sped up as the week proceeded, with the week’s largest gain happening on Tuesday.
The TSE saw its busiest day in recorded history on Tuesday, with over 3.91 billion shares changing hands. The record trading volume was almost double the prior high mark of 2.12 billion shares traded on 22 Dec., 2013.
TEDPIX, TSE’s main index, capped 3.19% or 2,415 points on Tuesday and closed at 78,199.10 points—it’s highest since March 8, 2014.
Most of the trading on market heavy weights was done at a 5% premium—the market’s maximum volatility limit—to the market’s open as excess demand brought the ask price up to the day’s ceiling.
The excess demand coupled with a price change cap creates what is called a demand queue. The queues of bidders dissipated entirely in the last minutes of trading and some stocks dipped as much as 3% as traders locked in profits from the three-day super rally.
Tuesday’s last-minute rout in equities was somewhat ominous. Late Tuesday’s downward momentum continued on Wednesday. TSE opened 275 points lower and shed 0.9% during the day as traders scaled back their positions for the weekend. TEDPIX closed at 77,498 points for the week.
Wednesday’s 701-point dip was TSE’s largest daily loss since March 16, 2015, when the index fell 3,557 points on uncertainty over nuclear talks.
Growth Driver
The main driver of growth has been Iran’s improving economic prospects due to the end of its isolation from the global economy. Sanctions on Tehran’s nuclear program were revoked on Jan. 16, as Iran scaled back its nuclear program in line with a deal it struck with the P5+1—United States, Britain, France, Russia and China, plus Germany. The historic agreement ended 12 years of hostility between Iran and the West over the scope of Tehran’s nuclear energy program.
Since the lifting of sanctions, TSE has surged 22%, while its smaller rival Iran Fara Bourse jumped 14.7%. IFB has shadowed TSE, but proved to be a less volatile market despite its smaller size.
Over the past week, IFB benchmark index, IFX, rose 3% to 816.33 points—near a 14-month high.
Enthusiasm about changes in Iran’s economic dynamics due to the lifting of sanctions has for now trumped the effect of plummeting oil prices—crude oil is the Iranian government’s main source of revenue and over 60% of Iran’s corporate exports are petroleum based, as well as crisis in the banking system and overdue government debt.
Positive sentiment over the removal of sanctions has been so strong that it has sent Iran’s equity markets in an opposite direction to global trends.
The yearlong decline in global equities that started with a selloff in energy became a full-blown bear market on Thursday, as a rout in bank shares extended losses in the broadest worldwide gauge past 20%, Bloomberg reported.
The MSCI All-Country World Index slipped 1.3%, pushing its decline since May to 20% and marking the biggest retreat from risk since Europe’s sovereign debt crisis in 2011. Every industry has fallen since last year’s record high with decreases exceeding 25% in financial stocks and 30% in energy and commodities.
SEO Chief’s Track Record
On Tuesday, Mohammad Fetanat, head of the Securities and Exchange Organization, held a press conference to outline SEO’s activities during the year and defend them.
Fetanat pointed to the large gains stocks made this year–almost all of it in the past month–and boasted the $120 billion combined value of Iranian exchanges TSE and IFB. The TSE is over three times IFB in size.
The SEO chief introduced five new websites, including the long-awaited English version of his organization’s web page.
According to Bourse Press, stocks fell due to rumors that Fetanat had resigned and his successor had been appointed.
SEO denied the claims in an official press release later.
Fetanat claimed the debt market will grow in size to match the combined market cap of listed equities in the next three years. He also said his organization will continue to move toward international market standards in regulation in the medium term.
