What is the reason for the stock market crash?
The Imam Sadeghi group is the main culprit for the stock market crash.
What is the reason for the stock market crash? According to Iran Gate, the Tehran Stock Exchange experienced its third-largest drop in history during the third trading day of the third week of May. Many stock market activists believe that a dangerous and mafia-like force is behind this heavy fall. Some experts also point fingers at the government and the economic team of Ebrahim Raisi’s cabinet.
Today, May 8, 2023, the Tehran Stock Exchange’s main index experienced a drop of about 55%. The equal-weight index, however, had a worse situation and recorded the largest decrease in the history of the Tehran Stock Exchange. A 45% drop in the equal-weight index led to the largest retreat in the history of this market. The value of small trades also faced a decline of about 15 trillion tomans, ending up around 10 trillion tomans.
These events occurred while the previous day also saw the main index drop by more than 95,000 units. The equal-weight index fell by more than 30,000 units, causing severe concern among shareholders. Some believe this concern affected the market, leading to today’s unusual and unprecedented events.
What is the reason for the 10% stock market crash?
As mentioned, the main index of the Tehran Stock Exchange decreased by about 10% over the past two days, May 7 and 8. But what is the reason for this event, and why have shareholders faced such a heavy shock?
According to many experts and stock market activists, this heavy drop over two trading days is not only unnatural but also a clear sign of manipulation by forces outside the market. Others believe the government deliberately acted to take the sting out of the market to prevent a repeat of the heavy drop in 2020. However, the main debate in the stock market at this moment is which of these claims is true.
Signs of mafia presence in the stock market
Heavy selling queues have formed in the Tehran Stock Exchange, mostly created by institutional investors. This event has occurred so suddenly and in such coordination that many believe this action is certainly ordered and under pressure from the Stock Exchange Organization and consequently the government of Ebrahim Raisi. Is such a claim correct?
Most Tehran Stock Exchange activists believe the formation of heavy selling queues in the stock market was done by government order. However, experts believe this manipulation was carried out by a group of managers known as the Imam Sadeghi group and supporters of Islamic economics. This group points fingers at Seyed Ehsan Khandozi, the Minister of Economy in Raisi’s government, and Majid Eshqi, the head of the Stock Exchange and Securities Organization.
According to this group of stock market specialists and economists, this event occurred not only due to the incompetence and inexperience of the managers but also because, in their view, the Imam Sadeghi group considers the stock market a gambling house and is not pleased with its development.
Although some also believe that the Imam Sadeghi group in the government not only has fundamental problems with the stock market but also pursues their own material interests. Interests that can be unimaginably met amidst the recent fluctuations. Of course, such interests will be achieved if the mentioned group has access to insider information, which naturally in this case, they themselves have been the cause of the heavy selling queues and consequently the severe price fluctuations.
Khandozi should be impeached and Eshqi dismissed
Given the series of events mentioned, most stock market activists insist that Khandozi, as the main person responsible for the current market situation, should be dismissed or impeached as soon as possible. This group believes that the Imam Sadeghi group, with their baseless justifications regarding Islamic economics with socialist tendencies, has put their investments at serious risk. Therefore, they demand the immediate removal of Seyed Ehsan Khandozi from the Ministry of Economy.
However, criticisms of the current head of the Stock Exchange Organization are much more severe than those of the Minister of Economy. This group believes that the Stock Exchange Organization not only forced institutional investors to sell en masse and exacerbate the supply side in the stock market but also, when the index drop exceeded the 5% threshold, did not close the market.
It should be noted that the stock market and securities law gives the organization the authority and permission to declare the market closed if the main index drops more than 5%. However, the law does not obligate the Stock Exchange Organization to react in this case.
In any case, stock market activists emphasize that the Stock Exchange Organization is obligated to ensure investment security in the market. However, the performance of the head of the organization in dealing with the recent stock market crisis has shown that not only Majid Eshqi but the entire regulatory system of the market has not taken a step towards securing shareholders. Therefore, the vast majority of individual and small shareholders of the Tehran Stock Exchange strongly insist on the dismissal of Majid Eshqi and other senior managers of the Stock Exchange Organization as soon as possible.
Where is the Revolutionary Parliament?
After the 10% drop in the stock index, some members of parliament and the economic commission reacted, but the most significant and thought-provoking reaction came from Mojtaba Tawanger. Tawanger, in a statement, pointed to the heavy selling by institutional investors and emphasized the need to hold a meeting of the High Council of Stock Exchange. However, the Stock Exchange Organization not only rejected the immediate meeting to investigate this event but also dismissed any possibility of closing the market.
However, the voices coming from the parliament strengthen the possibility that the economic commission is serious about pushing forward the plan to impeach the Minister of Economy. It should not be forgotten that the intense confrontation between the government and parliament, which has intensified since May 1, the day of Fatemi Amin’s impeachment, can act as a catalyst for the parliamentarians to sacrifice the second minister of Ebrahim Raisi’s government. Now we must wait and see whether the representatives will continue to confront and conflict with Ebrahim Raisi and the Imam Sadeghi group in managing the country’s economy or if they lack the courage to summon Raisi to parliament for the second time in a row within a month.
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