What does Joe Biden’s presidency mean for Iran’s stock market?
As 2019 was drawing to a close and the world was poised on the brink of an economy-ravaging pandemic, Iran’s Supreme Leader Ayatollah Ali Khamenei urged people to jump into the country’s red-hot stock market.
“I say to our dear people to certainly participate in productive investments if they can, including cooperatives and in some instances in bourse,” he said during a speech in November 2019.
The call was echoed by Iranian President Hassan Rouhani and his administration.
They were encouraging ordinary people to invest in equities as the country’s stock market was enjoying a steady upward trend.
The rally was sparked by Washington’s decision to unilaterally withdraw from the Iran nuclear deal with world powers in 2018 and unleash a torrent of sanctions to cripple Iran’s economy. That hammered Iran’s currency, the rial. And as the rial fell victim to crushing inflation, people shielded their rapidly eroding savings by investing in assets.
Many chose stocks. And government policies drove the bulls even harder.
In April 2020, Khamenei granted Rouhani’s request to release so-called “Justice Shares” in 49 state-owned companies to the Iranian people, and create exchange transaction codes to allow them to trade the stocks.
Then in May, the government started bundling shares in wholly and partially state-owned companies, allowing investors to buy a slice of those firms.
Another psychological boost for the markets was delivered when the government said it had earmarked one percent of foreign exchange reserves in Iran’s sovereign wealth fund to invest in the country’s stock market.
By May 2020, TEDPIX, the benchmark index of the Tehran Stock Exchange (TSE), surged past one million points for the first time ever.
Investment veterans and others warned the market was overheating. But the meteoric rise continued. By August, TEDPIX crossed the two-million-point threshold.
Then the bubble burst.