Seyed Hossein Fazel, a capital market expert, has analyzed the effects of war on the Iranian stock market and examined the direct relationship between the intensity of war and the economy of companies. War not only impacts company revenues but also affects exports, exchange rates, and investor confidence. In fact, any change on the battlefield can quickly influence the stock market.
Consequences of War on the Capital Market
The recent war experience showed that the Iranian capital market was closed for a long time, and after reopening, some companies affected by the attacks were unable to trade. Therefore, the main question is where the Iranian stock market will head if the war continues. The longer the war lasts and the more severe the siege becomes, the greater the operational risks for companies. At the same time, rising exchange rates and inflation can increase the nominal value of some companies and their assets.
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Different Effects on Various Industries
The effect of war varies across different industries. Export-oriented petrochemical, mining, and metal companies may benefit from increased exchange rates, but disruptions in exports and transportation can limit this advantage. Conversely, companies reliant on imported raw materials may face rising production costs. In this situation, the main question is not whether the stock market will rise or fall, but which companies can continue to produce and sell in wartime conditions.
Blockades and trade disruptions can directly affect the profitability of listed companies by reducing exports and increasing transportation costs. If the war continues, an increase in stock market volatility is expected, and the market will react to military news and exchange rates. In the short term, the psychological pressure of war can put the stock market under strain, but if the war drags on, inflation and exchange rates will become more significant.
There are various scenarios for the capital market. If the war moves towards a sustainable ceasefire, the stock market's reaction could be different. A reduction in political risk could alleviate market psychological pressure and change the outlook for foreign trade. Ultimately, the market's trajectory will depend on the duration of the war, the intensity of the blockade, the possibility of exports, exchange rates, and companies' ability to continue economic activities.
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