The CEO of Tehran Stock Exchange has rejected accusations that large institutional investors have manipulated prices, according to comments made in a recent interview with ISNA.
In a vigorous defense of the competitiveness of Iran’s main stock market, Hassan Qalibaf Asl stressed that the TSE is transparent and reflects the state of the real economy. He told ISNA that: “I don’t believe institutional investors are playing around with commercial shares. Every share has a price and if the price dramatically goes up or down, even institutional investors won’t dare to sell.”
The TSE is dominated by a few large institutional investors; amongst them are pension funds like the Social Security Organization, as well as large banks and credit institutions. Some experts have blamed irregular and unpredictable movements in prices on the power some of these institutions yield in the market.
Qalibaf Asl rules out such speculations, affirming that even institutional investors have to be subservient to the market logic.
“Although it is true that institutional investors are large, the phenomenon of price manipulation does not exist in the market.” He stressed that every market actor has the right to sell and buy whenever he wants. If the TSE ever infringed on this right, “institutional investors would no longer want to be active in this market. Therefore we should accept that the capital market must become completely competitive and free.”
He calls the arguments behind these accusations unfounded because sales have not been extraordinarily high as one would expect of a downward price rally. He stated that while primary sales amounted to 1.2 trillion rials ($41.7 million based on official exchange rate), the value of total transactions on an average optimistic day tops 7 trillion rials (about $242 million).
“Yes, it is true that over the past one year and a half people have suffered but we cannot blame low prices on any single actor. Neither should we accept a situation in which stock market managers control prices because that does not happen anywhere in the world,” Qalibaf Asl declared, adding that “investors should accept their responsibilities.”
Qalibaf Asl believes that the depressed stock market trends are a reflection of underlying economic conditions, stating that: “Economic recession and shortage of liquidity are the two main ills in the market.”
The head of TSE points out that his organization’s responsibilities are limited to improving transparency and liquidity. Previous warnings of the TSE to institutional investors went beyond this responsibility and hence were wrong, Qalibaf Asl says.
Tehran Stock Exchange has moved in unexpected directions over the past months. After a short rally when news of a successful nuclear framework became public, the TSE index has been falling again. It has not reacted positively to recent reforms in transparency and stock reporting either.
