Iran’s stock-buying frenzy gives way to market fall

Iran’s stock-buying frenzy gives way to market fall

Iranian stocks have plunged more than a quarter since their August peak, threatening losses for retail investors who had flocked to the market.

Tehran Stock Exchange’s benchmark Tedpix index topped 2m points for the first time earlier this year after share sales in state-owned companies helped to encourage a new generation of Iranians to buy stocks. But the index has since slumped about 28 per cent, trading below 1.5m points on Monday, in what analysts say is one of the most dramatic swings on record.

Saeed Laylaz, an economist, described the sell-off as the bursting of a bubble inflated by the government’s revenue-raising initiatives and the related stock-buying frenzy. “The market is correcting itself,” he said.

Maciej Wojtal, chief investment officer at Amtelon Capital — one of the very few foreign hedge funds to invest in Iran — said positive sentiment had become “too extreme” in recent months, with anecdotes of Iranians selling properties to increase their stocks exposure. “A lot of retail investors incurred heavy losses and the sentiment changed,” he said.