Economy, Business And Markets

Stocks Rebound as Gold Hits Record High

Stocks Rebound as Gold Hits Record HighStocks Rebound as Gold Hits Record High

Equities rebound from four-month lows, as low prices spurred bullish bets in the fourth Iranian month of Tir (ending July 21), but the advance was slow due to poor market prospects.

Demand for bonds and gold remained high, as investors scrambled for safer assets sending gold coins to a record high in Tehran.

Tehran Stock Exchange's main index rose 2.6% to 74,514.1 points off a five-month low hit on 20 June (the end of the third Iranian month of Khordad). Most of the gains happened in Tir's first trading week, as TEDPIX rose 1.5% after hard hits in the last weeks of the first quarter.

Tir's rebound came after a 9.5% drop in the first quarter of the current Iranian year (started March 20), as hopes of swift economic recovery on the back of an influx of foreign business were dashed amid reluctance of major banks to resume business ties with Iranian lenders.

The Iran Fara Bourse had the same general trend as TSE, but its gains were stronger. Its benchmark, IFX, rose 4% to 787.62 points, a five-week high, in Tir.

IFB's strong gains recouped much of its first quarter losses. The market declined 5.9% in the first quarter.

The IFX rose sharply in the first week of Tir but market momentum waned and the index peaked at 783.65 points on Tir 15. The market lost close to 20 points in the following week before resuming its hike to the month's close.

A unanimous decision by commercial lenders to drop one-year deposit rates below 17% this month fueled demand for higher yielding Islamic bonds.

> Record High

The Imami Gold Coin finished Tir 5.3% higher at 10,834,000 rials per coin, propped up by added global safe haven demand after the United Kingdom's vote to leave the European Union and an influx of money from equity markets.

The Imami hit a record high of 11,210,000 rials per coin on July 10, two days after gold peaked in international markets. Bullion for immediate delivery gained 4.8% during Tir and sold for just under $1,330 an ounce.

Imami's new record surpasses its peak during the aftermath of the 2010-12 currency crisis.

A small part of Imami's rise came from the weakening of the rial against the dollar. The Iranian currency sank 1.3% to 35,340 rial per dollar during the month.