EghtesadOnline: Tehran stock exchange's main gauge, TEDPIX, climbed 4,924 points or 3% to during the week to October 3, despite consecutive losses brought the market into bear territory on the last two trading days.
TSE also saw the value of its share trading rise 21% compared with the week before by closing at 185,559 point. The First Market Index was up 5068 points or 4% to post 138339 and the Second Market Index surged 2883 points or 1% to reach 361704.
During the 5-day trading week, 87.7 trillion rials ($6.1 billion) worth of shares and securities were traded, marking a 21% growth compared with the corresponding period of last week. Stocks lost ground on the TSE in a correction phase to cool down recent market overheating, with the TEDPIX falling after nine straight positive sessions.
The market’s downside was in fact anticipated and even welcomed by analysts who saw the unchecked rally as a long-term peril for the market, according to Financial Tribune.
Commenting on the market bull run, Mousa Ahmadi, a financial market analyst, told the Securities and Exchange News Website that the flow of fresh liquidity was the main propellant of the trend. Volatility in the parallel markets of currency and gold encourage the public to enter the stock market, but that was marred by speculative behavior of inexperienced investors, he said.
"Striving to protect the value of their assets [as the national currency tanked] and the strong desire for high returns led to the rush of new people with various degrees of financial knowledge into the capital market whose main feature was speculative behavior," Ahmadi told SENA.
He emphasized that the massive liquidity should be directed toward the capital market lest it would have an adverse effect on the economy. "But this should be done with proper training and culture and for this the relevant infrastructure should be strengthened."
The stock market's return on investment during the summer of 2018 was 47.5%, bringing the market's total gains during the first half of the financial year to more than 66%.
The rial has lost approximately 75% of its value since the beginning of the year. The United States has said it plans to impose new sanctions targeting Iran’s oil sector on Nov. 4.
> Market News
According to SENA, the biggest news affecting the equity market during the past week was President Hassan Rouhani's comments aimed at calming the currency market and the decision by the Central Bank of Iran to bestow new powers to money changers.
Rouhani said on Wednesday that he had ordered the CBI to buy foreign currency from exporters if it cannot be sold to importers via the secondary market's Nima system.
The government also has authorized the central bank to intervene in the foreign exchange market to prop the rial.
The High Council of Economic Coordination of the Three Branches of the Government, headed by Rouhani and the heads of parliament and the judiciary, “gave the central bank governor the authority to manage and intervene in the foreign exchange market.”
Another piece of important news was the announcement by a deputy oil minister that crude oil would be offered on the stock exchange.
Ali Kardor, CEO of state-owned National Iranian Oil Company said the Iran Energy Exchange will launch crude oil futures probably from this week as part of a plan to facilitate oil exports as US sanctions targeting the key oil sector in November draw nearer.
Mohammad Baqer Nowbakht, head of the Budget and Planning Organization said Tuesday at a meeting with Iran Chamber of Commerce officials that now that the stock market has gained popularity, it could be used as venue to solve problems of the monetary market.
Iranian banks and credit institutions have long suffered from major challenges, including, but not limited to, a huge credit crunch, very high ratio of non-performing loans and lack of conformity to international standards.