The Tehran Stock Exchange (TSE) has seen a relatively volatile start to the Persian year, which began in March.

It initially performed well, going up 11 per cent when total market capitalisation passed $100bn in March.

It lost about 8 per cent over April and May, when retail trade volumes declined by 40 per cent. Another 8 per cent was lost in June and the TSE has risen again by 5 per cent over July.

“The domestic political tensions have caused this volatility,” says Ali Mashayekhi, head of investment research at Iranian brokerage Turquoise Partners. ” There has been quite a lot of tension between the government and the supreme leader on the one side and the parliament on the other side, which has worried the market and with every speech the market changes direction.”

Instability in the global financial markets has also influenced the TSE. Investors have acted cautiously, which led to daily trade volumes dropping to $40m in June, half of the volumes seen in March and April.

The impact of the economic reform plan implemented last year is beginning to be realised and first quarter earnings results have also contributed to the volatility. Some sectors have performed well, but others like the private banking sector have recorded disappointing results. Parsian Bank, the largest private bank on the TSE by market capitalisation, lost 14.6 per cent of its value as a result of the reform plan.

The TSE is one of the world’s best performing indices. In comparison to other markets in the region, it has remained robust amid the unrest. On 26 June, the TSE’s vice-president Ali Sangenian announced that the bourse was looking to introduce an options market before the end of the summer this year. It has also submitted a proposal to the Iranian Securities and Exchange Organisation for establishing currency futures and gold exchange-traded funds market. TSE is awaiting approval from the regulator.