Kourosh Salimi

The rash remarks of Iran’s industries and mines minister, Ali Akbar Mehrabian, caused ‎unease in Tehran’s stock exchange and led to a sharp decline in stocks of steel companies ‎in the past two days. ‎

The Fars News Agency reported that in a meeting last week with managers of industrial ‎companies, Ali Akbar Mehrabian warned that companies affiliated with the ministry of ‎industries and mines must cap their prices and no company is allowed to behave contrary ‎to the government’s policy. ‎

Mehrabian, who seemed to be passing down the president’s orders to managers of state-‎owned companies, explained further that sometimes state-owned companies may post ‎losses due to price cuts, which is not a problem, because the national interests are more ‎important and inflation must be curbed. ‎

The stock market decline was due the business community’s fear that, despite prior ‎promises to companies participating in the stock exchange, the government might ‎interfere in the purchase and sale of steel companies. ‎

According to Shahab news, the consequence of analysts’ worries and negative reaction of ‎investors was predictable: heavy decline in stocks of steel companies in stock exchange; ‎and naturally, the decline in major stock indexes. In the first two days of this week, the ‎Tehran stock exchange index fell by 38 points, hovering around 1,000. ‎

The report adds: “Following his appointment to the ministry, Mehrabian promised to ‎promote industry and help solve problems of industrial companies currently traded in the ‎stock exchange. However, not only have investors not seen the minister’s practical and ‎committed support yet, but the minister easily and single-handedly destabilized 40 ‎percent of the 49.6 billion dollar Tehran stock exchange and worried thousands of ‎investors.” ‎

Shahab news reported that Mr. Mehrabian has perhaps overlooked an important ‎economic principle: “investors in the stock market buy and sell stocks to maximize ‎profits, not to abide by the officials’ ethical slogans. In these conditions, it is obvious ‎that any rash remark, rumor, or news that could cast doubt on profitability of companies ‎would unleash an immediate capital flight from the stock exchange and bring down stock ‎prices.” ‎