TEDPIX falls 28,000 points on Tuesday

Over 12.518 billion securities worth $114.559 trillion rials (about $2.727 billion) were traded at the TSE on Tuesday.

The first market’s index dropped 25,575 points, and the second market’s index lost 39, 961 points.

After several weeks of drop, TEDPIX could finally register growth in the past Iranian calendar week (ended on Friday).

The index rose two percent to stand at 1.207 million points in the past week.

In early August 2020, when all the major stocks around the world were experiencing serious declines, TEDPIX surpassed two million points.

This situation created some skepticism among investors regarding the creation of a bubble in the market, and some economists and market analysts also warned about the government’s over-interfering in this market.

The government, however, continued offering more and more of its entities on the market and further encouraged people to invest in the market.

Turning the fears of the investors into reality, TEDPIX started a downward trend in mid-August and has since slumped about 38 percent.

What President Hassan Rouhani called one of the most “astonishing rises” in the history of the stock market, became one of the most dramatic swings on record.

Now, the big question would be “what is on the horizon for the Iranian stock market?”

Farhang Hosseini, a capital market expert, has told the Tehran Times that although several external factors, including the disputes between the oil and economy ministries over the offering of the second ETF (dubbed First Refinery, or Dara Second), increase in interest rates, the ambiguities in the next year’s national budget bill, and etc. have contributed to the decline of the TSE’s main index over the past few months, the main reason for this decline is the unconventional valuation (to be more precise the over-valuation) of entities in this market for encouraging liquidity inflow.

Behzad Samadi, a market analyst and board member of a major broker in Iran, believes that the recent declines in the main index of the TSE has nothing to do with the fundamental and technical issues of the market.

He believes the main reason for this situation is the interference of the government and over-encouraging of the masses for entering the market without having the slightest knowledge even about the fundamentals of this market.

“Like its decline, the drastic growth of the market did not have any technical and standard basis,” he said.

According to Samadi, the bubble created in the TSE’s main index was partly the result of the excitement instilled by the government, and partly due to the huge gap between some entities’ real value and the prices for which they were offering their shares.