Recent speculations over the gloomy performance of a wide range of listed companies including high yielding ones at the Tehran Stock Exchange (TSE) have led investors to hedge their bets.
The extension of nuclear talks between Iran and the P5+1 has triggered the benchmark’s massive retreat; however the oil price slump has intensified the equity market’s selloffs. It should be noted that there have been other indicators that weighed on the TEDPIX and panicked investors.
November 12 was the beginning of a dramatic shift in the benchmark. Based on our analysis, the TEDPIX has nosedived more than 11.6 percent, which dragged down the TSE’s gauge to register new record lows within the past 15 months.
Since then, expectations have been slashed, and price swings have been recorded for various shares at the equity market, including for firms that are expected to outperform in the mid-run.
The benchmark has posted more than 5.6 percent drop since December 1, which underscores the fragile atmosphere at the stock market. Despite the fact that Iran is a frontier market, as long as the economic outlook is gloomy, the benchmark will keep falling down.
Market analysts estimate that the bear market is here to stay unless practical triggers give a boost to the equity market. Given the gloomy economy as a result of the depreciation of Iran’s currency, oil price plunge, an imminent budget deficit, probable lifting of western sanctions, and ambiguities over proposals in the budget like feedstock price and mining royalties, expectations have been eroded, and a persistent uptrend is unlikely.
According to TSE data, investors reviewed lackluster economic data in Iran, and irregularly sold off their shares, although almost all shares have hit rock-bottom value, with the lowest average Price Earnings (P/E) ever.
Market jitters once again weighed on the equity market, and pushed the benchmark to keep retreating on Monday. The overall index slipped 418.5 points or 0.61 percent to settle at 68,232.1. The first market index dropped 231.4 points or 0.75 percent to 50,284.4. The second market index tumbled 341.3 points or 0.25 percent to stand at 134,064.7. The free float index plummeted 610.9 points or 0.78 percent to end at 78,168.5. The industry index was down 329.1 points or 0.57 percent to 57,257.7, and the blue chip index dropped 18 points or 0.58 percent to finish another red trading day at 3,068.3.
As the economy has been buoyed by contractionary policies, and expenditure cuts, listed industries at the TSE, specifically those dependent on the oil price, heavily weigh on the benchmark, causing stocks to lose value. Hence, investors may feel too shaky to bear the risk and try to get rid of them in due time. Other investors may pretend to keep them in order to avoid more losses, and barely may embark on snapping bargains. Given investors’ sentiment, the volume is expected to take further plunge.
More than 538 million shares changed hands on Monday, valued at almost 1.13 trillion rials. Despite an uptrend both in volume and value of trade compared with the prior trading day, the TSE is still grappling with low level of trades.
Most of the stocks waxed and waned at Monday trading, with almost 79 percent of listed firms ending in red, however, one more time, a few companies heavily dragged down the benchmark including Ghadir Investment Company, and Telecommunication Company of Iran with almost 66 and 29 percent negative contribution respectively.
