Stocks sped up their descent in their third week of back-to-back losses in Tehran this week.
Both Tehran Stock Exchange and Iran Fara Bourse dropped, as fears about economic recovery were mixed with news of attempts to pry on confidential private information.
However, no cause can be singled out. Stocks have nothing going for them these days.
With the hype of sanctions relief fading, the poor financial condition of companies is preoccupying traders these days. But the rout in equity market is not one dimensional.
Corporate earnings outlooks are poor and there is little cause to think they may recover anytime soon. Corporate balance sheets are riddled with debt and scarcely show adequate cash flow.
TSE’s main index, TEDPIX, shed a full 2,000 points and finished the week 2.6% lower at 73,877 points–its lowest since February third. IFB declined even more than the TSE. Benchmark IFX lost 3.8% and dropped to its lowest since April 19 to finish the week at 777.06 points.
Failed Shot at Investors’ Info
The glum mood of the markets was such that even the promise of a further two-percentage-point cut to deposit rates by banks to 16% per year failed to woo fleeing investors back to equities.
Bond issuers on IFB’s bond market, however, are failing to keep up with demand for fixed income securities.
Half the week’s losses came from Saturday’s rout, when TSE shares fell nearly 1,000 points or 1.35%. Trading slowed down during the next three days with the market slowly bleeding 150 points.
However, panic gripped the markets again on Tuesday and the TEDPIX dropped 1%. Some of the rout was due to news that the Organization of Targeted Subsidies had requested the release of information about ownership of financial securities and the personal details of investors from the Securities and Exchange Organization.
The request drew rebuttal from the Economy Ministry, which issued a statement Wednesday evening, along with SEO head Mohammad Fetanat-Fard, who denied cooperation with OTS on the issue.
The TSE edged even lower on Wednesday. Bullish bets rose at the last hour of trade. The benchmark recovered half of the day’s losses and closed at 120 points short of the 74,000 points mark.
Just like the TSE, the IFB fell throughout the week with a brief pause on Monday. IFX’s worst drop, however, came on Saturday when it lost 12 points or 1.43%, coinciding with TSE’s 1.35% drop.
Great Expectations
There is also disappointment over the outcome of the nuclear deal signed last July that saw the lifting of sanctions against Tehran’s nuclear program.
Iran is having trouble turning its many memorandums of understanding into binding contracts and business investment.
“Many of Europe’s largest banks won’t do business with Iran for fear of breaching other US sanctions, which have nothing to do with the nuclear agreement, but a lot to do with US agencies and prosecutors,” according to the British daily The Independent.
Iranian businesses, on the other hand, have grown accustomed to shady dealings and fall far short of international business standards. These conditions are further complicating the situation for European banks.
“We expected investments in our capital markets within six to eight months after resumption of international ties. But that did not happen,” Behrouz Khodarahmi, secretary of Iranian Institutional Investors Association, told the national TV.
The administration of President Hassan Rouhani has planned to attract an ambitious $50 billion this year.
According to IFB’s Chief Executive Amir Hamouni: “In the first two months of the current fiscal year (started March 20), 2 trillion rials ($58 million) of foreign money have entered Iranian securities markets.”
This points to a possible acceleration of foreign investment.
Last year, Iranian securities attracted $200 million in foreign investments, according to Deputy Economy Minister Mohammad Khazaei.
However, the figure, added to other forms of foreign investment, is only a fraction of the stated government target.
