Five major issues causing weak performance at Tehran Stock Exchange

Business Materials 20 June 2016 18:50 (UTC +04:00)

Baku, Azerbaijan, June 20

By Farhad Daneshvar – Trend:

The ongoing turmoil in the international atmosphere is believed to be among the main reasons causing further falls in share prices in Tehran Stock Exchange (TSE), an Iranian market expert believes.

The TSE has suffered heavy losses over the past two and a half months as its main index wiped 412 points to close at 72,615 June 20, reaching its lowest level since February.

Hamid Mir-Moeini, a member of the commission of capital market at Iran Economy House, told Trend that the recent slump in the global economy has prompted Iran’s capital market to fall sharply.

Regional developments and unrests have had a negative impact on the Middle East’s economy including Iran, as well, he added.

In the meantime, Mir-Moeini sees the downward trend in the TSE as an adjustment in investors’ expectations, as the economic benefits of the removal of sanctions have not materialized as quickly as many investors had hoped.

The implementation of the Joint Comprehensive Plan of Action (JCPOA) in January put expectations in place with regards to economic prosperity in Iran.

The country’s failure to fully reintegrate into the global financial systems has also played a crucial role in slowing down the TSE performance, the expert added.

Saying that the slump in the prices of crude, commodities and oil products has affected the Iranian stock markets, he added there are also concerns over the future state of global economy.

Another reason for the weak performance of the TSE over the past months could be the contractionary policies adopted by the government aimed at tackling inflation, he added.

Although the government has done well in terms of tackling inflation rate, the contractionary policies have caused recession in the country. Therefore industrial companies suffering from recession have lost the value of their stocks.

Back in 2013 when President Hassan Rouhani took office the inflation rate was somewhere above 40 percent, which now hovers around 10.4 percent.