‘The performance for the next few months will not be exciting,’ says Atieh Bahardirector Albrecht Frischenschlager. ‘The index will continue to slightly decline for the main reason that there has been no major action on the stock market from the new administration and investors are waiting for clear policies as guidance. And no, the nuclear issue is not helping either.’

The end of the Iranian financial year on 21 September contributed to the declines, with investors freezing stock purchases amid low trading volumes. The market had already been weak since the start of the year as the election season began, and fell sharply when the economically populist Ahmadinejad took power. His government’s slowness in detailing its economic policy has wrought continued uncertainty.

‘The TSE isn’t going to climb because investor confidence is so low,’ says Balli Groupmanaging director Hassan Alaghband. ‘The market is dead on the demand side and there aren’t many exciting stocks out there right now.’

However, analysts say the market could pick up once the uncertainty is lifted because fundamentals have improved. ‘In all sectors that were overvalued a year ago you now have very reasonable prices,’ says Frischenschlager. ‘There are lots of interesting possibilities there once things are more settled.’

Until that happens, the market will continue to be driven mainly by short-term cycles based on rumours and corporate announcements, says Frischenschlager. For example, stock in Iran Marine Industries Company (Sadra), which was listed last year and has recently signed large contracts for work on the South Pars gas field, rose swiftly in late September.

More privatisations are scheduled for the coming year under the previous government’s budget law for the year and its proposed fourth five-year development plan. While the new administration has pledged to abide by those pieces of legislation, it has so far done little to implement them and investors are still waiting for new administrative teams to be put in place by the new cabinet.

The industrial and telecoms sectors are likely to see the most new stock released, with Industrial Development & Renovation Organisation (IDRO) looking to divest much of its holdings to the private sector through initial public offerings. The Irancellconsortium, which last year won the rights to develop Iran’s second GSM licence, is also in the process of negotiating whether to list 21 per cent of the shares that the foreign partner must divest on the TSE. However, it is still unclear whether the consortium can reach an agreement with the local authorities that allows it to take on the licence.