Tracking global markets, share prices in both Tehran Stock Exchange and over-the-counter Iran Fara Bourse took a beating on Monday.
TSE’s market cap-weighted index, TEDPIX, shed more than 14,800 points and closed the session 2.7% lower. Equal-weighted index dropped 1.91% to indicate smaller losses in small-cap companies.
Downturn in Tehran’s stock market started on Saturday amid increasing uncertainty among investors over the market regulator’s arbitrary decisions, and gained pace on Monday as an obvious response to trends in global markets.
The sell-off particularly hit petroleum-based stocks in refinery and chemical groups before extending to almost all other stocks throughout the trading session.
Steep decline in crude oil prices triggered a massive sell-off in refinery shares in the very beginning of trading session on Monday.
Global share markets tumbled on Monday as panicked investors fled headlong to bonds to hedge the economic trauma of the coronavirus, and oil plunged more than 30% after Saudi Arabia opened the taps in a price war with Russia, according to Reuters.
A climate of uncertainty has gripped the stock market since Wednesday evening when market regulator, the Securities and Exchange Organization, in a rare move said that it will further tighten the cap on price spread to 2% daily compared to 5% now.
SEO officials backed the abortive decision by linking it to protecting investors and fighting speculative activities that has led to unjustified increase in share prices.
They also referred to astronomical growth in the market over the past months, arguing that the sharp rise in stock market indicators is incongruent with Iran’s economic reality.
Although the decision was later nullified temporarily by Economy Minister Farhad Dejpasand , its side-effects are continuing to beat the market as investors are perturbed by possible intervention by the regulator to tamp down unreasonable market growth.
The market has grown three times over the course of one year since March 2019.