This is not simply a market driven by economic fundamentals, but rather a complex phenomenon resulting from a combination of "asset revaluation following the war + inflation expectations + liquidity re-entering the stock market."
① The Iranian stock market recently experienced a very unusual "shutdown-reopening" cycle.
The Iranian stock market had been closed for an extended period due to the war, only reopening in late May. The Tehran Stock Exchange was closed for approximately 80 days due to the US-Israeli military strikes against Iran, with the TEDPIX index at around 3.7 million points before the suspension. The index has now surpassed 6.38 million points, a significant change from its initial reopening level.
② Funds may be seeking "inflation-hedging assets." The Iranian economy faces severe inflationary and currency devaluation pressures. Tindex data shows that Iran's inflation rate remained as high as approximately 87.9% in July. In this environment, holding cash leads to a rapid decline in the purchasing power of the currency, prompting investors to seek assets such as stocks, gold, real estate, and foreign exchange. This could result in a strong nominal increase in the stock market. Therefore, a rise in the TEDPIX does not necessarily equate to a simultaneous increase in the real purchasing power and profitability of Iranian companies.
③ Stocks themselves can also serve as a tool to hedge against rial devaluation. A significant portion of Iranian listed companies belong to the petrochemical, steel, copper, mining, energy, and export sectors. These companies' revenues or assets are linked to the US dollar and international commodity prices. Therefore, when the local currency depreciates and inflation is severe: nominal corporate revenue increases – assets are revalued – stock prices rise. Thus, a unique phenomenon may occur in the Iranian stock market: the economy is struggling, yet the stock index still surges. This is not uncommon in countries with high inflation.
④ This round of price increases also exhibits very clear characteristics of a "liquidity-driven market." Over 90% of stocks rose, and over 80% rose by 2%-3%, indicating that the index was not driven by a few heavyweight stocks, but rather by widespread buying across the entire market. Funds flowed into the stock market → a large number of stocks rose → the index broke through key psychological levels consecutively, rather than simply a few sectors performing well.
