Title: Capital Market Stabilizes: A Shift Towards Realism and Its Political-Economic Implications
Tehran’s Bourse Sees a Return to Equilibrium
Following a period of volatility, Iran’s capital market is demonstrating signs of stabilization, moving towards a more balanced and realistic phase. While analysts agree that a strong, sustained bull run requires significant fuel—such as decisive policy decisions, improved economic expectations, and a genuine increase in liquidity flow—the market’s current performance indicates a capacity for gradual, steady progress even in the absence of such immediate catalysts. This cautious behavior from both buyers and sellers marks a distinct shift from emotional, news-driven trading to a more fundamental, value-based approach.
A Day of Trading: A Battle for Balance
Monday’s trading session was a testament to this new equilibrium, characterized by a real tug-of-war between buyers and sellers. Throughout the day, buy and sell orders repeatedly overtook one another, with the total trade value climbing back above a significant 10,000 billion tomans threshold—a level seldom seen in recent sessions. Although the outflow of retail investment capital continued for a second consecutive day, the higher value of buy orders and increased demand in major index groups have given analysts hope for a more balanced, and potentially positive, market trend.
The main index of the Tehran Stock Exchange settled with a 1.17% decline, while the more broad-based equal-weighted index experienced a smaller drop of 0.71%. Key players like “Fars,” “Parsan,” and “Bank Mellat” exerted the most negative pressure, while “Foolad” helped cushion the fall. The Over-the-Counter (OTC) market also saw a mild decline.
A key positive indicator was the resurgence of retail trade value, signaling the return of buyers. Although indices were negative, the market was notably more stable than in previous days, with a marked absence of widespread sell-off queues. The pace of the decline slowed, and the value of buy orders significantly outstripped that of sell orders, a sign interpreted by some as the market reacting to a support level.
The Role of Policy and Regional Outlook
Market observers continue to keep a close watch on political and economic developments. The current relative balance is seen as fragile, and any positive signals from policymakers or a de-escalation of regional tensions could be the catalyst that transforms this tentative stability into a sustained upward trajectory. The market’s performance is intrinsically linked to the broader political-economic environment, and positive developments in these areas are considered essential for long-term growth.
Sectoral Shifts and a New Index Initiative
A detailed look at sectoral performance reveals notable shifts. The “Basic Metals” group, which had led in capital outflow the previous day, reversed course to top the list of sectors attracting retail investment. This turnaround is largely attributed to market rumors of a new agreement between the Ministry of Industry and the Central Bank regarding the allocation of export-derived currency for the mining and mineral industries.
In contrast, the automotive sector faced significant challenges, leading the pack in capital outflow, followed by banking and oil refining groups. Meanwhile, gold-based investment funds saw the highest capital inflow, suggesting a segment of investors is seeking safer-haven assets amid ongoing market fluctuations.
In a significant development for market structure, the CEO of the Tehran Stock Exchange announced the upcoming launch of new indices by the end of the Persian calendar year. These indices are designed to serve as a foundation for new investment funds and provide more accurate benchmarks for evaluating the performance of small, medium, and large companies.
Expert Analysis: A Step Towards Market Maturity
Market expert Hessamoddin Dermishchi commented on this initiative, stating, “This is a commendable decision as it provides market participants with more precise and realistic benchmarks. The main index has not been a suitable measure of the overall market for years, and many experts have criticized its functionality.”
He added that while the new indices are unlikely to single-handedly spur a market boom, their primary advantage lies in offering investors a clearer picture of different industrial sectors. “This tool can help retail investors make more targeted investments through index-based funds and reduce the risk of selection error,” Dermishchi explained. “It can be effective in attracting a segment of retail investors, though an immediate market revival should not be expected from it alone.”
This move towards more sophisticated financial instruments, combined with the market’s recent shift from hype to fundamentals, points to a gradual maturation of Iran’s capital market within the framework of the country’s overarching economic policies.