Iranian Stocks continue Two-Year Slump

By Morteza Ramezanpour, for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iran Business News.

Lingering ambiguities, cuts in company earnings, high interest rates, stubborn inflation and Western sanctions have combined to send the Tehran Stock Exchange’s TEDPIX to its lowest point in over two years.

According to Tehran Stock Exchange data, TEDPIX has been extending its monthslong rout, and is now hovering just above the 61,000 mark. Broad sell-offs, particularly in the important automotive sector amid negative adjustments in biannual company reports, have greatly contributed to the latest downturn.

The TSE benchmark had gained some 6% in anticipation of a comprehensive nuclear deal between Iran and six world powers during the Iranian month that ended July 22. However, once the deal was clinched on July 14, the bubble burst. Accumulated gains gradually evaporated, stirring further concern among both retail and institutional investors. The benchmark TEDPIX tumbled over 4% last month, and a total of almost 12% since the nuclear deal was struck.

The gloom currently hanging over Iran’s cash-strapped economy is broad, and encompasses many leading indicators. Mounting pain from falling commodity prices, the high level of nonperforming loans — estimated at up to $60 billion — the budget deficit of potentially 3.8% for the current Iranian year (which began March 21, 2015), the high rate of return being offered by banks and lingering sanctions are ensuring a bleak short-term outlook for the Iranian economy.

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