Black days for the capital market in Iran in the shadow of the inefficiency of the two governments

The Development Fund and the Stock Exchange Company have been left without a manager. This is while $70 billion of people's capital has been "liquidated." In the dark days of the capital market, it does not seem that Raisi has a solution to the crisis that has been sealed by Rouhani.

When the Islamic Republic's media speak of the "dark days" of the capital market, there can be no doubt that the situation prevailing in this market has deteriorated to such an extent that it cannot be concealed.

The flood of people turning to the stock market has given the capital market crisis in Iran a “national” dimension. Officials of the Islamic Republic say there are 50 million shareholders in Iran. Therefore, the financial crisis of the stock market is the financial crisis of the majority of the people of this country.

To examine this chaotic situation, let's start with the latest news: a report published by Quds Online on Tuesday, November 2.

The source reported the approval of a “plan to investigate the stock exchange organization.” If this plan becomes a bill, it is apparently intended to increase oversight of the stock market.

This comes after the controversy over Bitcoin mining in the basement of the Tehran Stock Exchange building, the CEO was dismissed and his deputy was temporarily appointed as the acting director.

 Melting of savings

Not only are two of the Islamic Republic's most important economic institutions currently operating without a CEO, but other uncertainties have also cast a heavy shadow over financial trading in capital markets. These include uncertainties stemming from the lack of clarity in the JCPOA negotiations in Vienna and the possibility of sanctions being lifted.

Beyond that, many questions remain unanswered. The Central Bank's policy on determining the dollar rate has still not been announced. On the one hand, there is talk of paying dollars at the government rate (the former Jahangiri dollar), and on the other, of mandated pricing.

Gholamreza Marhaba, spokesman for the Parliament's Economic Commission, addressed Hassan Rouhani's approach to the stock market and asked: "On what basis did the then president invite people last year to invest their money in this market?"

After Hassan Rouhani called on people to transfer their savings to the stock market, the Tehran Stock Exchange index fell by more than 30 percent. He says, “In this fall, $70 billion worth of people’s capital was lost.”

Many of these losers were low-income individuals who had invested their small financial savings in the stock market and have now suffered losses to the point of bankruptcy.

Financial corruption should also be added to the factors contributing to this loss of wealth. For example, the spokesperson for the Parliament's Economic Commission speaks of people's assets and savings flowing into the accounts of fake companies.

Marhaba said: "One of the cases is that a paper company (fictitious) was registered on the stock exchange with a nominal capital of 200 billion tomans, and the shares of this paper company, which does not even have a central office, were sold to the public on the Tehran Stock Exchange for 3,200 billion tomans, and the holders of these shares now have no more paper in their hands and have suffered huge losses."

The unclear fate of the injected funds

It has been four months since the resignation of the CEO of the Capital Market Development and Stabilization Fund. It has also been more than a month since the dismissal of Ali Sahraei, CEO of the Stock Exchange Company.

Sahrai was dismissed after news of cryptocurrency mining in the basement of the stock exchange building became public. He himself announced his resignation, and ISNA quoted the board of directors of the stock exchange as saying he was dismissed.

The CEO of the Tehran Stock Exchange Company left, but no steps were taken to clarify the controversial Bitcoin mining story.

ISNA wrote about this controversy: "Although the issue was a disaster in itself, and the Stock Exchange Organization, as the body that oversees the stock exchange company, announced that the case would be referred to the legal department, almost nothing else has happened in the company so far except for Sahrai's dismissal."

It is said that despite the clear names of those involved in this matter, no one has been dismissed and there have been no consequences for anyone.

Before the Raisi administration took office, the CEO of the Development Fund had announced an injection of more than 2,000 billion tomans with the aim of stabilizing the capital market. Half of the amount was to be injected in December of last year and the rest in May.

Although Mohammad Ebrahim Aghababaei, the fund's outgoing CEO, said that money had been injected, there is no information about the fate of the money. Mohammad Mehdi Asgarpour, who currently heads the fund, did not even "respond" to an ISNA reporter.

Ebrahim Raisi: From promise to action

The problem of the capital market in Iran was one of the issues that presidential candidates addressed during the election campaign.

One of the candidates (Qazizadeh Hashemi) had spoken of a "three-day" solution to the stock market problem, and Raisi himself had said that he would create mechanisms to solve this problem.

The Emtaed website, publishing an article titled "The Stock Market Crisis is Very Serious," also addressed the Raisi administration's performance in this regard.

This news source wrote: "Although the Ebrahim Raisi government entered the arena with many promises and by criticizing the policies of the previous government in the field of the stock market, no specific strategy has been seen from the president and the economic forces affiliated with this government regarding the stock market so far. As far as it can be said, sometimes the economic managers of the previous government were and are a head and shoulders above the current appointed managers."

The author of this article accused the Raisi administration and its economic officials of trying to overcome this crisis through "talk therapy," and warned that "this crisis is going to impose itself on the government at the highest level."

Source: DW