So how is it that now, with sanctions in place, the country going through a rocky period politically and a Bazaar strike costing the government $4 billion after only two days of strikes, the TSE continues to defy all logic and reach new highs?
Some analysts argue that the recent jump in share prices is due to a better-than-expected performance by a batch of large firms including SAIPA (automobiles), Foolad Mobarake (steel), Parsian Bank, Chadormalu Mining & Industrial company and the Mokhaberat company of Iran (telecommunications). They say the jump in share prices is down to an increase in demand in the global and local markets for their products. If this is the case, it is indeed positive news.
But regardless of possible growing domestic and international demand for the products of such companies, other commentators believe the share price of some of these major companies may still be artificially inflated. Their concerns stem from cases including that of Mokhaberat, for which the Iranian Revolutionary Guard Corps finance company Etemad-e Mobin became its largest shareholder as soon as its shares were listed on the TSE. Companies such as Etemad-e Mobin are not private companies—they are backed by the government and there are concerns that such companies are keeping share prices artificially high.
With its growing population, wealth of natural resources and well-educated workforce, the Iranian economy and the Tehran Stock Exchange in particular have the potential to become a regional powerhouse. But such potential is threatened by the concerns over transparency prompted by the ever-climbing TSE share prices.
The Majles decision to investigate is therefore a welcome one, although whether it will have the mandate to carry out a thorough investigation and follow through on any findings is another matter. After all, the financial arms of the IRGC, the Basij and other government bodies involved in the privatization programme have a strong interest in ensuring that share prices remain high.
So does Ahmadinejad’s government. The distribution of 20 percent of the shares of privatized companies to the poor, and the subsequent dividends paid to them, are used as tools to boost the regime's popularity. They are also an important means of making lower income bracket members of the public more dependent on the government for their income, thus reducing their motivation to take part in activities to overthrow the regime.
But as with any other financial markets, sooner or later the astronomical rise of the TSE will have to peak. And when it does, the effects are likely to ricochet around the Islamic Republic's byzantine halls of power.
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kuldeep
majlis ordering an inquiry show a thriving democracy in IRAN. Iran has been a historic center for learning and culture in asia along with India. increasingly as teh countries globalise they detah to a certain extent from domestic happenings and reflect global parameters.