Iran has earmarked 1% of its sovereign wealth fund (SWF) to stabilise the country’s stock market, the main index of which has lost over a fifth of its value in a month, triggering anxieties that further falls are ahead, the semi-official Mehr News Agency on September 8 reported government spokesman Ali Rabiei as saying in a press conference.

The capital injection would be made on September 12, he added. The report didn’t give details of how the mechanism would work.

The Tehran Stock Exchange’s main index, the TEDPIX, closed September 8 down 2.31% at 1,570,001. Shares rose to a record high of 2,065,114 on August 9.

Iran’s SWF, the National Development Fund, was established in 2011 and draws most of its capital from oil income. It hasn’t published data on its size since the US reimposed heavy sanctions on Iran in 2018. In May 2016, Mehr said it stood at $80bn, according to Bloomberg.

Despite the hammering the Iranian economy has taken in the past two years from US sanctions and more lately from the coronavirus (COVID-19) crisis, many Iranians have sought refuge in the country’s stock market—high inflation and a collapsing local currency cause those who hold cash to lose money at a rapid pace, thus wagering on the TSE is seen as offering a hedge against this risk with assets that remain liquid, partly thanks to the government’s commitment to back the bourse via its privatisation programme. Nevertheless, there are those who say the exchange’s benchmark index, the TEDPIX, is a bubble that has gone much too far and threatens to explode over the heads of somewhat desperate investors with a juddering correction.

The TSE rally was partly driven by a government decision to sell state assets worth around $2bn to raise funds to assist in the fight against the coronavirus.