Iranian Stock Market’s Chaos Reflects Iranian Regime’s Economy

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Status: Finished  |  Genre: Editorial and Opinion  |  House: Booksie Classic


With increasing pressures of Coronavirus Pandemic, which according to government estimates led to unemployment of 5 million Iranians, equivalent to 20% of the country’s labor force, the government resorted to selling government assets on the stock market to finance itself.

In countries with stable economies, stock market can have a profound impact on their economy and consumers. Normally the stock market index is directly related to country’s economic growth. In other words, the country’s economy cannot have a negative growth and at the same time its stock market index flourish. Iran’s stock market has been severely affected by recent economic crisis, devaluation of the Iranian currency and the regime’s incompetence in managing Coronavirus outbreak. At a time when Iran’s economy is severely damaged and the government is facing heavy financial pressure, Hassan Rouhani deceivingly said, people are investing in the stock market and this is a sign of people’s trust in country’s economy. Behind the scenes he is running a scam unlike any other country, with engineering and manipulation of the market.

Finally, stock exchange and foreign exchange attracted people’s liquidity to compensate for Rouhani’s budget deficit. The stock market and foreign exchange have become two sources of revenue for Iranian government.in the beginning of spring of 2020 stock index of Tehran Stock Exchange was 500,000 units. However, Iranian government manipulated the stock market indexes to attract capital from parallel markets such as foreign exchange and gold, to compensate for its budget deficit. They raised this index to 2 million!

It came as a surprise to everyone how, while Coronavirus has stagnated all the world’s famous stock markets and caused stock indexes to fall, stock index in Tehran set such a record high? Examples of government fraud and manipulation of stock market:

The government practically deceived people by offering shares of companies and factories that did not exist at all! For example, the Petrochemical Company sold shares of Kazerun and Noorabad Mamasani (two cities in south west of Iran) Petrochemical Companies, which do not exist at all.

Studies show since the beginning of 2020, Iran-Khodro shares had a growth of 1,211 percent and Saipa Automotive Company shares increased by 783 percent however, in the period of 12 months ending on March 2020, Iran-Khodro lost 17.5 Tomans and Saipa lost 14.5 Tomans per share!

Of course, this policy of Mullahs’ regime, like all its policies, had its share of victims. Some people seeing the decline of Iran’s currency day by day, looked for a way to prevent this devaluation and fell into the trap set by government under the pretext of stock market. They invested in stocks markets and in months of August and September when Stocks plummeted to 1.6 million units, they lost their capital!

Deliberate manipulation of Tehran Stock Exchange and its disclosure immediately showed its impact on the foreign exchange market. In other words, when people realized that there was a possibility of a further fall of stock market, they withdrew their capital from stock market and turned to foreign exchange and gold markets. This was another ambush prepared by Mullahs’ regime for people’s capital!

At this stage, when the government faced an increase in foreign exchange demand, the central bank raised the price of free market foreign exchange rate under the pretext of adjusting government and free market currency exchange rates and offered the government dollar to the people at a free market price. Government made a huge profit, all of which was to compensate for the budget deficit without being named so!

But contrary to regime’s intentions, this drop in stock market index and losses endured by citizens has its own social consequences and created shocks in society, which could eventually become a security issue for the regime!

In this way, it becomes clear how the thieves and swindlers under Khamenei’s command, fabricated fictitious companies that do not exist, engineered fictitious growth for bankrupt companies in the stock market that resulted in pulverization of 1/5 trillion tomans of people’s capital. However, President Rouhani the master deceiver introduced this as production leap! According to Iranian media, the number of new Iranian investors in financial markets between last March to July reached 3 million citizens, while before the government’s plan to list government companies on Tehran Stock Exchange, there were about 600,000 investors.

The average purchase of government shares by a citizen was not more than a few hundred dollars! With the fall of Iranian currency and losses inflicted on stock market, the hopes of Iranian citizens in meeting their vital needs were dashed and they suffered severe losses due to collapse of Rial.

A lady investor said: “The situation is much worse than it is announced. I lost all my eight months of savings that I had put aside to buy a washing machine in the blink of an eye. I invested 10 million tomans of my savings in stock market last June. Since then, price of the washing machine I wanted to buy has doubled, but my stock in the stock market has lost 80% of its value. “

Iranian citizens were lured to the stock market by Iranian government’s false propaganda, and many of them sold their properties and invested in stock market hoping to earn more, but this led to the loss of their assets. The engineering of the stock, foreign exchange and gold market by Iranian government continues, but this practice has a certain limit and only when the people in the streets raise their voices in protest and decide to end the rule of Mullahs, this practice will end.

 


Submitted: October 17, 2020

© Copyright 2020 Hassan.Mahmoudi. All rights reserved.

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Serge Wlodarski

When governments or big investors manipulate the stock market, it will always fall apart, usually sooner than later. Small investors always bear the brunt of it. IMO, the stock markets in America today are an unsustainable bubble destined to collapse. If Trump loses the election and refuses to acknowledge the results, the ensuing chaos could crash the markets in a matter of weeks.

Sat, October 17th, 2020 2:34pm

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exactly , you are rgiht

Sat, October 17th, 2020 10:49am