A view of the Tehran Stock Exchange (file photo)[/caption]Iranian shares advanced for a third day as financial institutions agreed to set up a fund to counter price swings on the Tehran Stock Exchange.
The nations benchmark stock index rose 0.9 percent at the close of trading in Tehran, taking its three-day advance to 2.8 percent, according to data on the bourses website. The gauge touched a six-month low on April 19 before four banks and two insurance companies agreed yesterday to contribute 50 trillion rials ($2 billion) for the Capital Markets Development Fund.
Irans index has declined 15 percent this year after soaring 130 percent in 2013, beating returns posted by the 93 major global equity gauges tracked by Bloomberg. President Hassan Rouhani may have felt extra pressure to stop the fall in share prices as the government introduces measures to remove state subsidies from fuel and energy prices, according to Alireza Salavati, an independent analyst based in London.
The government doesnt want shares to fall and be blamed for messing up the economy right now, Salavati said by phone. This does not address some of the fundamental problems of the bourse.
The pledge of resources for the fund comes after a bourse delegation visited London on April 11 to address the British Iranian Chamber of Commerce. International investors have flocked to Tehran in the aftermath of Irans agreement in Geneva last November to curb its nuclear program in return for limited sanctions, Hassan Ghalibaf Asl, the chief executive of Tehran Bourse, said in London on April 12.
The bourse should not create a fund to intervene in the market, according to Ramin Rabii, who helps manage $200 million at Turquoise Partners in Tehran.
The recent declines were part of a normal market reaction to last years gains, he said by phone today. Once prices are more attractive, retail and institutional investors will return to the market.
By Bloomberg
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