Page 41 - IRANRptNov20

Iran earmarks 1% of SWF to stabilise stock market
250 companies ‘in queue for Tehran IPO’
foreign hedge funds to invest in Iran—told the publication that positive sentiment had become “too extreme” in recent months, with anecdotes of Iranians selling properties to increase their stocks exposure. “A lot of retail investors incurred heavy losses and the sentiment changed,” he said.
More than 3m investors joined the stock market in the four months to July, according to domestic news reports. That compares with a typical annual figure of about 600,000.
The ​FT​ spoke to one new investor, Roghieh, a 37-year-old masseuse from Tehran. She said she had saved money for about eight months to buy an LG washing machine, but tempted by the growth in the stock exchange when the pandemic forced her to stay at home with little income, she invested 100m rials of savings in the bourse in June—that sum was then equivalent to $524. The washing machine is now more than twice as expensive in rial terms while the value of her stock bets has fallen 80%.
“I should have bought dollars or gold coins instead of stocks, as I had no clue how risky the bourse was,” she was quoted as saying.
Iran has earmarked 1% of its sovereign wealth fund (SWF) to stabilise the country’s stock market, the main index of which has​ ​lost over a fifth​ ​of its value in a month, triggering anxieties that further falls are ahead, the semi-official Mehr News Agency on September 8 reported government spokesman Ali Rabiei as saying in a press conference.
The capital injection would be made on September 12, he added. The report didn’t give details of how the mechanism would work.
The Tehran Stock Exchange’s main index, the TEDPIX, closed September 8 down 2.31% at 1,570,001. Shares rose to a record high of 2,065,114 on August 9.
Iran’s SWF, the National Development Fund, was established in 2011 and draws most of its capital from oil income. It hasn’t published data on its size since the US reimposed heavy sanctions on Iran in 2018. In May 2016, Mehr said it stood at $80bn, according to Bloomberg.
Despite the hammering the Iranian economy has taken in the past two years from US sanctions and more lately from the coronavirus (COVID-19) crisis, many Iranians have sought refuge in the country’s stock market—high inflation and a collapsing local currency cause those who hold cash to lose money at a rapid pace, thus wagering on the TSE is seen as offering a hedge against this risk with assets that remain liquid, partly thanks to the government’s commitment to back the bourse via its privatisation programme. Nevertheless, there are those who say the exchange’s benchmark index, the TEDPIX, is a bubble that has gone much too far and threatens to explode over the heads of somewhat desperate investors with a juddering correction.
The TSE rally was partly driven by a government decision to sell state assets worth around $2bn to raise funds to assist in the fight against the coronavirus.
More than 250 companies have registered an interest in listing on the Tehran Stock Exchange (TSE), a market that has tripled in size over three years, IBENA reported on September 7. ​However, despite the substantial retreat, some investors believe the TSE might ascend once more on the last
41​ IRAN Country Report November 2020 www.intellinews.com