Iran’s stock market has experienced significant turbulence amid rising fears of a military confrontation with the United States, compounded by an increasingly grim economic landscape. The main stock index, TEDPIX, plummeted for the third consecutive day, registering an 8.3% decline within just a week. This downward trend reflects growing anxiety around potential military actions, especially following the US deployment of military assets in the region.
The atmosphere of uncertainty has been heightened by the ongoing political and economic instability in Iran, where anti-government protests have intensified. Authorities claim that over 3,000 protesters have lost their lives, attributing the violence to “terrorists” backed by foreign nations, particularly the US and Israel. However, human rights organizations outside Iran suggest that the actual death toll may be much higher.
US President Donald Trump made headlines last week by announcing that he had dispatched an “armada” of naval forces toward Iran, a decision described as a precautionary measure against further actions from Tehran. This announcement followed a series of mixed messages from the Trump administration, which had initially expressed support for the protesters while later mentioning diplomatic possibilities with the Islamic republic.
Albert Boghzian, an economist and professor at Tehran University, explained that heightened sanctions, a climate of military threat, and the recent positioning of the USS Abraham Lincoln aircraft carrier in the Persian Gulf have all contributed to prevailing market anxieties, regardless of whether direct military actions occur.
In contrast, the United Arab Emirates affirmed its stance against any military strike on Iran from its territory, advocating instead for dialogue and the upholding of international law in a recent foreign ministry statement.
Adding to the market’s woes, the Iranian government has enforced a total internet blackout for the past 18 days to stymie the dissemination of information amidst the protests. Trading activity has suffered as a result, with volumes dropping below $50 million on Monday—significantly lower than the previous week, which averaged over $210 million. Maciej Wojtal, the chief investment officer at Amtelon Capital, noted the drastic decline in trading volumes.
The economic situation in Iran remains dire, afflicted by chronic inflation, systemic corruption, and a dysfunctional subsidy system. This month, the year-on-year consumer inflation rate reached 60%, the highest in over a decade, largely driven by the government’s removal of subsidized foreign currency rates for basic goods imports. Such actions have led to increased production and import costs, further straining consumer budgets.
Analysts emphasize that unless tensions are alleviated and a stable economic framework is established, investor confidence will continue to languish. Boghzian remarked that there is currently no coherent government plan for managing inflation or price stability—both essential elements required to foster a conducive environment for investment in the capital market.
As a result, many investors are turning their attention away from the stock market, seeking refuge in safer assets, notably gold and foreign exchange. As the situation unfolds, the outlook for both the Iranian market and its broader economy remains precarious.
