The junior exchange Iran Fara Bourse was down 31.04 points or 1.6%. This is the second consecutive loss for the stock market since the beginning of the trading week on Saturday and the second heavy drop for the market in winter.
According to the website Donyaye Bourse, Sunday's rout was felt across the board and except for three stocks, all categories were hit. Unlike the foreign exchange market which has benefited from news about the launch of Europe's Special Purpose Vehicle known as INSTEX, stock investors have not shown any enthusiasm over the long-awaited trade mechanism.
"Despite the fact that Europe introduced its payment channel for Iran, the reality is that it will not have the impact [on the market] as expected," Financial Tribune quoted Shahin Cheraghi, a market analyst, as saying.
Cheraghi told the Financial Tribune that the lack of optimism over INSTEX has two reasons: one is that it comes with strings attached, like observing anti-money laundering standards set by the Financial Action Task Force; the other is that Europe says the channel will be used for food and medicine.
"And that is why we have seen a significant drop in exports by some companies in some cases by 50% as evident in companies' earnings reports and the stock market picks up on that," Cheraghi added.
The fact that higher forex rates in the past week did not lift the market, as it could and should have, reflects that pessimism.
According to Cheraghi, unless some positive developments, like in the functions of the SPV emerge and are visible, the market rout will continue.
French, German and UK foreign ministers announced the creation of the Instrument in Support of Trade Exchanges (INSTEX) on Thursday which they said is a new mechanism for "facilitating legitimate trade with Iran in order to preserve the Iran nuclear deal."
According to the E3 statement, INSTEX will function under the highest international standards with regard to anti-money laundering, combating the financing of terrorism (AML/CFT) and EU and UN sanctions compliance. In this respect, the E3 expects Tehran to swiftly implement all elements of its FATF action plan.