TEHRAN (Dispatches) - The Iranian government says it will put aside one percent of the country’s sovereign wealth fund to stabilize the stock market which has fallen for consecutive sessions in recent weeks.
The Tehran Stock Exchange’s overall index lost 3,564 points to 1,546,446 within 20 minutes after opening on Wednesday.
It was down from a record high of 2,065,114 on Aug. 9 when the government’s retreat on a decision to sell more state assets capped a monthslong rally and sent the shares into a nosedive.
Authorities have embarked on a damage control campaign, trying to put a cushion under the market which has lost over a fifth of its value in a month.
The capital injection announced by Government spokesman Ali Rabiei on Tuesday, however, triggered anxieties that further falls are ahead.
Iran’s National Development Fund, a rainy-day kitty, was established in 2011 to collect some of the proceeds from the country’s oil and gas industries for the benefit of future generations. The latest data on its size goes back to May 2016 when it was worth $80 billion.
The Tehran Stock Exchange has been harboring one of the top performing equity indexes in the world, defying the coronavirus pandemic, the most aggressive US sanctions on Iran and an oil price rout.
Benchmark TSE index (TEDPIX) has surged more than 300% since the start of the year, riding high on a rally in steel, petroleum and petrochemical industries.
Among the oil companies, the Isfahan Oil Refining Company has grown 500% since the start of the year, while Tehran Oil Refining Company has soared 450% and Bandar Abbas Oil Refining Company up to 250%.
The surge has sparked fears that TEDPIX might be perched on a bubble that is going to explode over the heads of many ordinary investors.
Detractors have drawn analogies with Venezuela and Zimbabwe, where indexes have surged more than 400% in local terms amid rising inflation and capital controls.
Others, however, believe comparing Iran to Venezuela and Zimbabwe is wrong.