In a troubling sign of economic instability, Iranian investors are rapidly withdrawing from the stock market, driven by escalating regional tensions and domestic policy failures.

The Tehran Stock Exchange has seen a severe downturn, with reports from Etemad Online indicating a withdrawal of approximately 1,800 billion tomans ($275.5 billion) from the capital market on a single day in April, marking a 373% increase from the day before. This massive exodus of capital highlights the deepening crisis within Iran’s financial markets.

The stock market plummeted by 95%, with the overall index dropping over 53,000 units to 2,207,000 in just a week. Analysts attribute this decline largely to the fear of conflict in the Middle East, particularly affecting small-scale investors who are quickly losing confidence in the market’s stability.

This trend of capital flight is not new, but part of a continuing pattern exacerbated by the government’s policies, corruption, and the international isolation stemming from its alleged support of terrorism. A report from Fararu noted that the Central Bank’s data from spring showed a negative balance exceeding $10 billion, suggesting significant ongoing capital outflows.

Efforts by President Ebrahim Raisi’s administration to stem this tide have been largely unsuccessful. Measures discussed at economic coordination meetings seem to have done little to reassure investors. This sentiment was echoed by Saeed Moeedfar, head of the Iranian Sociological Association, who spoke of a “new wave of emigration” and societal despair worsened by economic crises in sectors like production and employment, further fuelled by inflation and governmental mismanagement.

Data revealed by former Minister of Industries Mostafa Hashemi-Taba and Mehdi Ghazanfari, head of the Tehran Chamber of Commerce, indicates that over $280 billion has been drained from Iran over the past decade, with $45 billion of that in the last four years. These figures are staggering and reflect the lack of investor confidence and the broader societal impact of such financial losses.

The April 2023 report from the Chamber of Commerce also highlighted exacerbating factors like internet shutdowns, social media censorship, energy shortages, and other unfavorable conditions, which have intensified the economic strife. The economic decline is so severe that despite the government’s efforts to project resilience, the real picture shows a nation grappling with deep economic and societal issues.

As investors continue to seek safer havens abroad, Iran’s economy teeters on an increasingly precarious edge. The ongoing capital flight and economic conditions steer the country toward a critical juncture, highlighting the need for significant policy shifts to restore stability and confidence among its citizens and the international community.

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