The capital of 46 million Iranians has vanished
The stock market is gradually becoming a filthy gland in the Iranian economy. Last year, when the stock market index was turning green and buying queues were a hundred meters long, many experts warned that a price bubble was forming and the blow of it could cause many problems for Iran’s half-hearted economy.
Stock market lawyers who rejected any request even at the highest prices suddenly accepted any request at the lowest price and presented themselves as sellers to ignite the crisis in the stock market and making the situation worse than it was.
The stock index rose to 2.1 million units in August last year but is now limited to 1.1 million units. Iran Stock Exchange Index Now, after the retreat of one million units, which is the largest historic decline in the stock market in the last five decades, still has no intention of going green and there is no glimmer of hope to improve the situation or create stability in this market.
Studies show that if this trend continues, the stock market index may even retreat one million units more. Now every week shareholders are protesting and criticizing the government. Numerous rallies held in front of the organization and the stock exchange company are proof of this claim.
In an open letter to the heads of the three branches of power, the Association for the Development of Professional Investment announced:
“The current state of the economy and the capital market, as a full-fledged mirror of the economic situation of the country today, is in an unsuitable and very miserable condition.
“In the last year of the century (Persian calendar), which has been named ‘Production, Support and Removing Barriers’, let us remind once again that in the last few centuries, no official in the history of Iran has emphasized the issue of production and popular participation and the people’s economy.
“Despite this level of emphasis today, words such as production, investor and worker have become synonymous with poverty, misery and helplessness, and in contrast middleman ship and usury and rent-seeking have become synonymous with wealth and fame.”
The important point of this letter is the amount of damage inflicted on the Iranians. This analytical letter addressed to the leaders of the three branches added:
“The sharp drop in the market and the outflow of liquidity have seriously damaged the families of 46 million people in the stock market, so that almost half of Iranians lost 40% of their assets in the stock market and are now helpless and forlorn in the coronavirus crisis.
“They have blindly entered markets such as cryptocurrencies, which have undoubtedly led to the outflow of liquidity from the country, or in the currency and coin market, waiting for the collapse of the country’s economy, or in the real estate market, looking for future inflation. Really, can any country in the world consider itself indifferent to the loss of property and wealth of half of its people?”
Dissatisfaction with the capital market situation is now rampant among a significant part of the population. Never before has the capital market experienced such a collapse and such a degree of political intervention, and on the other hand there are more than 50 million stakeholders in the capital market.
The volume of money entering the stock market last year also showed itself to be on the increase in the issuance of transaction codes and consecutive records in the participation of initial public offerings, and statistics show that during the boom period of the stock exchange last year, 109 trillion tomans of money entered the stock exchange by the people.
The capital market is thirsty these days; thirsty for the billions of tomans that have flowed out of this market in the last eight or nine months or the confidence that seems unlikely to return to this market soon.
Estimates indicate that 50 million people are active in the market, but now, whether in Clubhouses, on the web, on the street, on public transport, or even at stakeholders’ protests, there is no hint of investor confidence in the market.
A look at the trend of the money exhaust from the market shows an intensification in recent days. On some days of April of this year, between 60 billion and 490 billion Tomans of liquidity were taken out of this market by individual entities.
Last Sunday, the outflow of real money from the stock market continued for the eighth consecutive day, and the value of the change from real to legal ownership of the market reached 528 billion tomans, which increased by 43 percent compared to Saturday.
A worrying trend that shows the non-confidence of small shareholders in the capital market. Right in such an atmosphere, there are contradictory rumors about injecting money into the market, but these promises have not been fulfilled yet. It was in mid-December last year that the CEO of the National Development Fund announced the injection of 2 trillion tomans to support the stock market until the end of 2020. But apparently this did not happen.