Tehran Stock Exchange faces volatility amid geopolitical risks

The Tehran Stock Exchange has experienced significant volatility and downward pressure. While some reports indicate a slowing of the index decline, the main index has faced sharp drops, at one point falling to levels not seen since early October. Market analysts note that while the main index has struggled, the equal-weighted index and the Farabourse have shown signs of recovery, suggesting better performance among small and medium-sized companies.

Investors are currently navigating high levels of uncertainty driven by geopolitical risks and the proximity of the US elections. Experts warn that these tensions could impact the operational fundamentals of companies by disrupting energy, transportation, and supply chains. Potential risks include increased costs for raw materials, energy constraints in heavy industries like steel and petrochemicals, and difficulties in accessing foreign currency.

Capital outflows have been observed, with significant amounts of liquidity leaving the market as investors move toward caution. The market remains highly sensitive to political news, with the potential for even fundamentally strong stocks to face selling pressure if regional tensions escalate.