In this analysis, we will refer to an issue that economic analysis networks have paid less attention to, and this issue has been completely forgotten along with the inflammatory news of the foreign exchange, energy and gold markets. This is nothing but the flight of dollar and foreign currency capital from Iran and the migration of money to neighboring countries or other countries in the world. Unfortunately, the reports in this section are very worrying. We will discuss this issue in more detail below. Please be with Artan Press.
*** Withdrawal of capital from Iran
Unfortunately, the outflow of capital from Iran has become extremely worrying. The outflow of capital under the pretext of various goals and intentions has been done, all of which were due to the weakness of investment indicators and the lack of ease of business and distrust of the macroeconomic environment. Announced and documented statistics show that over the past two years, about $ 100 billion of capital has left the country, and we see this today in the purchase and investment of housing in neighboring countries by Iranians.
*** Slow entry of money to Iran
Unfortunately, in addition to the outflow of investments, the reverse trends and the inflow of money into this have been greatly reduced due to sanctions, and we must add the depreciation cost of projects to this issue. A large number of international investors have withdrawn their investments or stopped projects due to sanctions on Iran. The investment trend in the country during the last two years has been negative and the depreciation rate has exceeded the investment, which is worrying. This means that the cost of depreciation must be taken into account in the economic calculations of the plans, which will increase the cost of the industrial sector.
*** What issues led to the outflow of capital ?
Another issue that became the outflow of capital from Iran was the insecurity of the markets. Even the housing market was shaken at times by the shadow of the war under Trump. So people gave up productive and industrial work and thought about moving capital to safer markets. Another issue that hit this year The issue of the stock market was a heavy burden on investment thinking in Iran. After the government’s procrastination in developing the capital market and leaving it half-finished and directing liquidity as a dim light to deposits in the last 6 months, although the stock exchange has taken positive steps to stimulate demand, it is witnessing the emergence of an investment option. We are new to the people, who have sounded the alarm for the people and the officials.
*** The charm of the cryptocurrency market
After suffering heavy losses in the stock market, currency, gold, and the decline and sometimes sharp fluctuations in these markets, people were looking for other options. Unfortunately, these options did not exist on the borders of Iran. Currency cryptocurrencies have created an attractive market that has attracted a large number of investors. It is safe to say that in the coming years we will have a large market of cryptocurrencies with boards and proprietary trading systems in the world, and the risk of this investment, especially in the legal risk sector, will be reduced. These hypotheses have pushed money out of traditional markets and into digital currencies.
*** The big risk of the cryptocurrency market
A major risk in the cryptocurrency market threatens people’s capital, and that is the lack of accurate information about the rules and policies of the cryptocurrency market. For example, if their wallets fall into the hands of others, all their capital will be wasted. The existence of a large number of emerging cryptocurrencies, the lack of a reliable financial system inside for investment, purchasing and consulting, etc. are part of the threat to the cryptocurrency market.
Regarding this market and the lack of sufficient information on how to trade, leverage transactions, etc. in this market, which can be considered a significant risk for investment and greatly increase the risk of trading in this market for Iranians. In fact, the lack of education on how to trade and the lack of awareness of the risk of this market for the general public may cause losses to people who have migrated to the market in despair. In general, anyone who enters this market should know what risk he is operating in this market and he definitely needs training and there is no problem in allocating a part of the investment portfolio to this market with full knowledge.
*** Extreme fluctuations in currency codes
Another issue that can be unbearable for new investors is the high risk in cryptocurrency markets. Despite all these conditions, people have invested a large part of their capital in this market, which is not in the hands of the Central Bank and the economic system of Iran. Prices in the cryptocurrency market experience very sharp fluctuations and it may not be possible for everyone to tolerate these fluctuations. Prices fluctuate sharply in response to news, and as this is an emerging market it may undergo fundamental changes.
*** The alarm has been sounded for the country’s economy
People are tired of grammatical economics. The most basic principles of financial burdens are balanced supply and demand without the use of additional force and order in the market. Due to unnecessary interventions in the stock market, people have inevitably turned to the cryptocurrency market, looking for a place where the framework cannot be changed, there is no order supply and cascade sales, and so on. Suicidal entry into these markets with all the capital can lead to a heavy outflow of money from the economy and heavier losses to the ignorant people. Unfortunately, this year, the stock market destroyed the investment mentality of the people, and this situation will not improve for years, and it pushed the incentives to invest abroad.
*** Outflow of personal capital to Overseas financial markets
We have seen various cases where exactly the entire billion capital of an individual or company has been diverted to financial markets abroad or spent on buying property in European countries and even Turkey. In January of this year, the Iranians fell behind the Iraqis in buying property in Turkey only, but in the rest of the year, they were the first foreign buyers of property in Turkey.
The purchase of 908 units of real estate in September by Iranians shows the biggest jump compared to the previous months, even before the epidemic. The cryptocurrency market is just as hot and intense, and a significant amount of money leaves Iran every day. The flight of capital to this risky market was the result of political disputes and widespread interference and lack of control over the stock market in these 6 months, which resulted in distrust of the market of this value, so that people are willing to take the risk of currency cryptocurrencies. Uncertainty conditions enter this market.
*** Withdrawal of liquidity from banks
The result of this unregulated and uneducated entry is clear. The heavy outflow of liquidity from the country, the more severe recession in the financial markets, the massive outflow of money from bank deposits and the deepening recession and the slowdown in economic growth are the most obvious effects of this accelerated move. Banks will happen, and this will be the main feature of this event, so that it will have a destructive effect on the country’s financial system.
The fraud of anonymous companies and domestic brands under the name of broker and consultant, etc. of the people should also be added to these cases. The emergence of overnight analysts who will be cryptographers and package dealers is one of the least of the consequences. According to the official reports of the Central Bank, in the last 4 and a half years, the balance of the country’s capital account has been negative $ 58 billion. It is worth mentioning that this number means a sharp outflow of capital from the country in exchange for little foreign investment in our country
*** Convert assets to dollars
The high demand of the people to convert assets into dollars and invest them abroad, especially the purchase of real estate outside Iran, forex and digital currencies, is the daily withdrawal of one thousand billion tomans of real money from the stock market is not unreasonable, this theft organized by The government from the stock market will have terrible consequences for the Iranian economy.
All macroeconomic indicators that show Iran’s trade deficit or surplus are in a state of emergency and need attention. In fact, this part of the economy has been left to its own devices and no scenario for market prosperity is introduced. This is a great danger for the entire economic system of the country and is a great threat to the investment system. They destroyed the stock market, which could have been an active and dynamic market for the benefit of the country, and now the cryptocurrencies are blinking at Iranian capital.
*** Withdrawal of major business owners from the stock market
But there is still a big risk lurking in the liquidity of society. Most ordinary people have left the stock market, and business and industry owners are now the main shareholders in the stock market. With the continuation of this trend in the stock market, we will definitely see the outflow of capital from those who are the main owners of businesses in Iran.
In the same period, we have witnessed the outflow of 90 billion dollars of capital from the country. Another important challenge and chronic disease that the Iranian economy has been facing for decades is the issue of paying energy subsidies and the unrealistic prices of water, electricity, gas, etc. During all these years in the Iranian economy, all kinds of subsidies, including energy subsidies in the form of electricity, gas, etc. are paid.
The government must stop holding. Of course, the privatization method was done in the worst possible way. Not only has it not been done privately, but it has also been separated from ministries that are familiar with industry issues and transferred to ministries that do not have the necessary mechanism to control, monitor and direct. The first thing the government has to do is pursue international banking issues, and it has to take a fundamental step in providing the infrastructure. It must lead the necessary developments in the upper and lower classes according to the wealth of the country. For some of these sectors, the government should consider an incentive policy to reduce valuation.
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