Economy, Business And Markets

Stocks Slip Further Amid Uncertainty

Stocks Slip Further Amid Uncertainty
Stocks Slip Further Amid Uncertainty

Stocks finished the second trading day at the Tehran Stock Exchange (TSE) with slight losses as investors fled equities and currencies markets on mounting concerns about a contagion effect from the ongoing recession in the country.

As the stocks kept falling in the equity market, the TSE's main index (TEDPIX) extended its losses for a second day on Sunday.

According to TSE's website, traders' sentiment kept falling on Sunday with the TEDPIX inching down 99.3 points or 0.14 percent to finish another poor trading day.

The first market index was off 56.6 points or 0.11 percent to 52,384.2. The second market index dipped 298.2 points or 0.21 percent to 141,715.8. The free floating index tumbled 175.6 points or 0.22 percent to close at 80,103.4, industry index gave up 77.9 points or 0.13 percent to 60,482, and the blue chip index lost 6.8 points or 0.21 percent to 3,283.7.

As there was positive news over the potential cut in the banking interest rates, however, commercial banks are not playing ball and keep attracting investors to invest their money in the commercial banking sector.

Due to the recession in Iran and ongoing fluctuations in the economy, Iranian banks initiated a series of non-banking exercises, which is illegal under Iranian banking law, as they are working beyond their remit.

In a straightforward economy, banking operations are clear as they have businesses within a small group of business like the equity market. The Central Bank of Iran has said that it is monitoring both private and governmental banks, though when referring to the commercial banks, it looks the other way.

Iranian banks have not been following the CBI's regulations since the collapse of the Iranian currency and financial sector. Since then the country has been grappling with severe stagflation and banks have been trying to repay their overdue loans to survive and help the economy to move out of recession.

Considering this fact, the CBI is not tightening the screws on them, while doesn't let commercial banks run their own affairs.

Given the harsh economic situation in the country, every single business is struggling to attract investors and keep afloat.

Based on this approach, the equity market, which is relentlessly in need of a fresh flow of capital, shouldn't solely rely on the news over banking interest rates. However there are a variety of methods to build a robust equity market.

Following the international sanctions, which have caused the market to slump, as well as wrong policies of the former administration, the economy won't be back on track in the near future.

The administration has rolled back inflation and has launched two concrete plans to counter the recession and bolster the stock market. But looking precisely at the economy and the capital market's difficulties, no drastic change will happen although the outlook is no longer gloomy.

Because of the hurdles in the economy, bullish investors may come back to the TSE very soon. Considering the administration's move toward creating a vigorous economy as well as a possible positive outcome in the negotiations between Iran and the P5+1, bearish trend won't reign over the equity market for a long time.