Prospect of More Trump Is Actually Good for Some Iranian Stocks

Donald Trump’s surprise showing in a cliffhanger U.S. presidential election is proving a relief to some Iranian stocks.

After losing a fifth of its value since Oct. 11, Iran’s main index of shares rose 2% on Wednesday, the biggest increase in more than three weeks, as Trump appeared to have a chance at winning the closely contested ballot. The rial weakened 4% against the dollar, according to an average exchange rate based on prices quoted by traders on the unregulated, open market in Tehran.

Unlike Trump, who withdrew from a nuclear pact with Iran and reinstated sanctions, his Democratic rival Joe Biden supports the 2015 agreement and wants to resolve the standoff with Tehran. Local investors responded to the first vote tallies by dumping rials in favor of stocks and backing companies whose export income will gain from a weaker currency.

“Sectors that would benefit from a new deal with the U.S., such as automakers sold off and those that benefit from the weak rial, like large exporters rallied,” said Maciej Wojtal, founder and chief investment officer of Amtelon Capital, an investment company focused on Iranian equities. “That would imply that the stock market reacted positively to a stronger than expected Trump performance.”

The Tehran Stock Exchange’s leading TEDPIX index has surged 322% over the past year. It set a record in August, spurred by a government sale of state assets and investors grasping for safe havens as the pandemic and more U.S. sanctions further damaged the rial.

Iran’s currency has lost almost 50% of its value since January, breaching 300,000 against the dollar for the first time. The cost of the greenback is likely to soar to 500,000 rials if Trump managed to secure a second term, according to Khosrow Abdi, a forex trader in downtown Tehran’s Ferdowsi district.

©2020 Bloomberg L.P.

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