Iran Stock Exchange: heavy public turnout and fears of bankruptcy

Al-Jazeera Net-Tehran

The general index of the Tehran Stock and Stock Exchange for the first time in its history exceeded the threshold of one million points, to close yesterday, Wednesday, at the level of one million and 17 thousand and 659 points, up 3.5%.

The Iranian Stock Exchange continued its strong rise, which started after the outbreak of the Corona virus in the country, bringing the total traded shares last Wednesday to 16 billion and 852 million shares and securities executed through more than 2.2 million deals worth more than 180 trillion Iranian riyals (about $ 1.1 million).

The Iranian stock market has witnessed an unprecedented recovery since the outbreak of the Corona virus in the country three months ago, as liquidity began flowing to the financial market in light of the recession, inflation and increased unemployment caused by the pandemic, according to observers of the economic affairs in Iran, as well as the government’s promotion and offering shares of its major companies on the stock market.

Investors' concerns And to
stand up to the views of new investors on the Tehran Stock Exchange, the young man Shahdamir Barasian told us in front of a financial brokerage center in the capital Tehran that he had traded shares after losing his profession due to the outbreak of Corona in the country, adding that his fear of losing the value of what he collected of money during the years The past provided yet another incentive to his decision to enter the stock market.

In his interview with Al-Jazeera Net, Parsaian indicated that he had made good profits during the past two months, stressing that in light of the increasing inflation in the country and the banks ’decision to cut interest rates, the stock market was the best option available to him to get rid of the obsession with unemployment.

As for Ali Azadi - who confirmed that his capital has multiplied several times during the past six years on the stock exchange - he described the heavy demand for the stock market as disturbing because the beginners do not know the rules of the new market, explaining that inflation is the main factor for a large number of them to buy shares.

In his speech to Al-Jazeera Net, he considered that the presentation of shares of government companies on the stock exchange came to bridge the state budget deficit and reduce inflation by attracting bewildering liquidity among citizens, expecting the Iranian stock market to go bankrupt.

Stagnation does not go bankrupt.
For his part, the Iranian economist Saeed Leylaz considered that the Tehran Stock Exchange was too late to exceed the one million point threshold, and that what it was should have reached eight years ago, and expected that the stock market would continue to recover during the coming period until its index touches the barrier of one million and 500 thousand Point.

He saw in his speech to Al-Jazeera Net that the popular turnout on the Tehran Stock Exchange during the past few months exceeded all expectations, attributing the reason for this to the recession that hangs over the gold and hard currency markets, cars and the high liquidity in the country.

However, the comprehensiveness of the turnout was also affected by an emotional wave in the popular economy, which seeks to fortify itself against the waves of inflation.

He described fears of bankruptcy on the Tehran Stock Exchange as "in place" because of the continued liquidity increasing in the country, but he ruled out that his country's stock market would go bankrupt in the coming period.

And Dr. Laylaz expected that the Tehran Stock Exchange will witness a recession that will last for several months, which means that the value of shares will decline in light of the continuous inflation, indicating that the recession in the stock market will urge investors - especially new ones - to exit the market.

He stressed that the government's offer of the shares of its largest company in the stock market is a step in the right direction to reduce the bankruptcy of new investors and those who could not buy various shares, as well as attract liquidity and contain the repercussions of widespread demand on financial markets, stressing that this policy will contribute to the stability of the stock market relatively.  

Tips
The Iranian Stock Exchange Organization announced that foreigners residing in the country in a legal way have the right to invest in the national stock exchange, after obtaining the necessary licenses.

In the meantime, the economist, a member of the Expediency Council for Diagnosing the Interest of the Iranian System, Ghulam Reza Al-Mesbahi, said that the stock market boom does not mean that the national economy does not suffer from recession, explaining that about 10 thousand companies closed during the recent period, and justified the demand for the stock exchange by reducing the Iranian banks interest rate.

He indicated in a press statement that the country's inflation index reached 40% at the end of last Iranian year (20 March last), stressing that the value of shares in the stock market is increasing in proportion to the inflation index.

He advised the general public not to sell their property - especially homes, cars, and real estate - in order to invest in the stock exchange, in order to reduce potential damages, stressing the need for new investors to consult the stock exchange experts.