Weekly growth returns to stock market

September 18, 2020 - 15:38

TEHRAN- Tehran Stock Exchange (TSE), which had witnessed drop of its main index, TEDPIX, in five consecutive weeks, experienced growth in the past Iranian calendar week (ended on Friday).

TEDPIX closed at 1.704 million points, gaining 148,000 points in the previous week, coming back to the rising trend, which it was experiencing since the last months of the previous Iranian calendar year (ended on March 19).

The indices of Tejarat Bank, National Iranian Copper Industry Company, Ghadir Investment Company, Bank Saderat, Mobarakeh Steel Company, Bandar Abbas Oil Refining Company, and Iran Khodro Investment Development Company were the major contributors to the weekly growth of TEDPIX.

The index had dropped four percent in the week ended on September 11, while it had also experienced a five-percent decrease in the week ended on September 4, a two-percent fall in the week ended on August 28, an 11.3-percent drop in the week ended on August 21, and a two-percent fall in the week ended on August 14.

TEDPIX had hit the record high of two million points on August 2, and while it had been experiencing an unprecedented trend of rising over the recent months, it witnessed several days of drop in five weeks.

While Iran’s stock market has not received any external shocks such as those form the foreign currency exchange rate, inflation, parallel markets, and international issues, some internal factors have caused the recent drops in this market.

One of the major factors was canceling the offering of shares through the second exchange-traded fund (ETF) on due time.

The second ETF (named Dara II), is to offer shares of four refineries of Tehran, Tabriz, Bandar-Abbas and Isfahan, and with the cancellation of Dara II offering, a drastic fall occurred in the stock market. 

Liberalization of “Justice Shares”, so that trading them in the stock market would be possible, was another contributing factor for the drop in the market.

Justice Shares are shares of government-owned companies that were given free to the six lowest income groups of the society almost a decade ago. Shareholders were not allowed to sell the shares until May, when based on a government’s plan, the shares were allowed to be tradable in the stock market.

The government’s plan named “Economic Breakthrough” was the other issue affecting the stock market, as no details were announced about this plan.

A sudden drop in Shasta’s index was another reason.

On April 15, Iran’s stock market witnessed its largest-ever initial public offering, as Social Security Investment Company (SSIC, also known by its Persian acronym Shasta) offered eight billion shares, which account for 10 percent of its stakes, for sales in Tehran Stock Exchange.

Shasta’s index, which experienced a sharp decline after being closed for three days, has been another contributor to the TEDPIX’s recent fall.

There were also some other factors leading to the recent drops in the stock market, of them it could be referred to reducing the value of brokerage credit, and conducting trades in two shifts per day at the TSE.

Then the government and Securities and Exchange Organization (SEO) took a number of measures to tackle the mentioned factors which had put the stock market in a decline status.

The measures have apparently brought the expected results.


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