Title: Tehran Stock Exchange Navigates a Path to Growth Amidst Economic Balancing Act
A Cautious Ascent
The Tehran Stock Exchange concluded the latest trading week with a modest upward trend in its indices. According to market analysts, the equity market may undergo a period of price and time correction before potentially resuming its growth trajectory. This continued ascent, however, is conditional upon positive stimuli and a reduction in economic and political risk factors.
Signs of Stability Emerge
Pedram Routiha, a capital market expert, pointed to emerging signs of stability and even a tendency for growth. “The volume and value of trades indicate that buyers remain powerfully present in the market, which has largely determined its current direction,” he stated. He added that the influx of capital in recent weeks has helped the market establish a relative floor, leading to calmer trading behavior. This situation suggests the market has reached a point of equilibrium and, depending on conditions, could once again pursue an upward path.
Routiha highlighted a mix of positive and negative factors influencing the market. On one hand, elements such as interest rates and political risks can exert pressure and slow the momentum. On the other, the growth of the negotiated and free-market dollar rates, and crucially, the supply of foreign currency on the secondary trading floor for many companies, are significant positives. This dynamic both enhances the valuation of stocks and bolsters the profitability of dollar-reliant companies.
The Need for a New Catalyst
The market has grown to a specific peak recently, followed by a short correction. It appears that a new driver is needed to continue the movement. This catalyst could be news related to the national budget, political developments, or corporate financial reports. While risks such as power outages, governmental restrictions, and unpredictable policies persist, the primary market drivers seem stronger and are capable of reactivating the growth path.
Analysis of trading patterns shows a high correlation among various symbols, with active and powerful buyers still present in large companies. While there was a brief shift towards smaller, more undervalued stocks, major corporations continue to be supported by strong buyers.
Broader Economic Context
Expert Mehdi Karimi provided analysis on interconnected markets, starting with foreign exchange. He noted that the dollar rate is currently in a range of 112,000 to 113,000 tomans, with an estimated year-end equilibrium rate of around 125,000-126,000 tomans. He does not foresee a sharp increase in the near term, but rather a gradual rise in line with inflation, provided two key factors do not exert new pressure: systemic risks and military tensions, which have recently decreased, and the level of oil exports, which have continued steadily.
Regarding the money market, Karimi pointed to high interest rates on government bonds, reaching up to 38-40% for short-term maturities. He expects these high rates to persist, given continued government bond issuance and the central bank’s restrictive monetary policy, which naturally curbs rapid movements in other markets.
A Positive Medium-Term Outlook
In summary, the market correction is not expected to be prolonged. Even if it is more time-based, the market is anticipated to gradually find its main course. While “rapid growth” may be too strong a term, the market possesses the potential to re-enter an upward trajectory and even surpass previous peaks. The market appears to have established its floor, buyers remain active, and fundamental factors support dollar-based stocks, contributing to a positive medium-term outlook.
Karimi projected that the overall market index could experience figures above four million units by next summer, contingent on key factors. A reduction in interest rates and the details of the upcoming national budget—particularly concerning gas feedstock prices for petrochemicals and the management of foreign currency—will be critical in shaping market expectations. With key economic variables remaining on their current course, the capital market can gradually move towards a more balanced and subsequently ascending state.