Who's to blame? There are a lot of potential targets to point fingers at: Unilateral US sanctions spiking investment risks, a currency shock disrupting the entire economy and making forecasts nearly impossible and the global ebb and flow of commodity prices.
But the primary suspect is the one who took credit for its growth in the first place yet whose policies eroded the rally: the government.
> Taking Credit for a Soaring Market
Back in June 14, at the height of stocks' frenzied growth following upheavals in the foreign exchange market, Economy Minister Masoud Karbasian claimed credit for injecting fresh cash into stocks in an Instagram post, according to Financial Tribune.
"The government is trying to tame the money supply growth by channeling it toward productive sectors, with its example being the capital market's growth in the past two days," he wrote.
Two days before that, head of Planning and Budget Organization was echoing the same sentiments in a TV interview.
"People don't have to think they can only invest in currency, coin and auto market. They have to know that the capital market is more attractive in comparison; investing in it will also mean supporting producers," said Mohammad Baqer Nobakht who also doubles as government spokesperson.
But what did the government really do? Its response requires going back to inspect the rally's roots.
> Stocks Can't Get No Satisfaction
Starting on June 11 and lasting until June 25, Tehran Stock Exchange's main index, TEDPIX, grew over 20% to a new high of 115,174.5, as the smaller Iran Fara Bourse's IFX jumped 18.8%.
Trade value for the three week-period saw a new high, too, as it rose every week to hit $2.65 billion.
But in retrospect, cash would not have been channeled into stocks if they were not attractive enough compared to parallel markets. What piqued investors' interest was the devalued state of most shares in dollar terms, especially after the rial plunged by over 30% against the greenback in the last fiscal year's (March 2017-18) dying months. Export-oriented stocks were even more attractive, as their profits were expected to spike.
Coming into the new fiscal year (starting March 21), most hopes were dashed on April 10 as the Central Bank of Iran took extreme measures and officially pinned USD/IRR at 42,000 rials, making all other rates illegal and branding anyone trading in the open market as smugglers.
This hurt exporters most, as they were effectively barred from selling their currency yields at market rates.
Stocks remained comatose for the next month as investors either looked for safe haven investments or just went for plain speculation in gold coins or FX black market.
Yet money started rushing back and led to a soaring growth mid-June as rumors of a "Secondary Forex Market" spread, in which CBI would recognize a "negotiated" FX rate. Some hinted it could be the black market rate, which was 2,000-3,000 rials higher than the official one.
Enthusiasm was curbed again, however, as First Vice President Es'haq Jahangiri announced in late June that major exporters (including petrochemical and metal producers) were still confined to the official FX rate. However, the rally died down in the next few days with investors going into a selloff.
The government's later attempts, including tax cut for stock trading and exemption for capital increase, did little to attract money back to stocks as its policies had already shot down the one single factor that drove the market forward.
There were, of course, other factors in play, too. But the state's actions, as the economy's main custodian, had arguably the highest impact on all markets involved.
As for the stocks, the best the government could perhaps do is to let go of its controlling policies and stop trying to be its savior.