Lots More on the Protests and Financial Crisis in Iran

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0:47Bloomberg Audio Studios. Podcasts, radio, news. Joe, do you like Persian food? Yeah. Oh, yeah, definitely. Yeah, I make, I'm very proud of this, if I say so myself, a mean gourmet sapsi. I actually don't know if I'm pronouncing it wrong, but supposedly it's the Iranian national dish. And it's a sort of like beef stew with spinach and a bunch of different herbs in it. So it's really green. And then with kidney beans, it's delicious. And the thing I like about it is you can make it and then store it, freeze it, and it actually gets better over the next week or so. I, this is my idea for a restaurant, which is just like make food and then put it in the fridge for overnight and then serve it cold.

1:33Because I think like every dish. I would be there. Every dish is better. Like after a night in the fridge, somehow like all the flavors come out. It's like, why don't we just make this to the default eating? I did a deadlift. I am both the most popular trader and most successful trader at Citadel. Feta's going viral. Barges. This is an after school special, except. I've decided I'm going to base my entire personality going forward on campaigning for a strategic pork reserve in the U.S. Black gold. These are the important questions. Is it robots taking over the world? No, I think that like in a couple of years, the AI will do a really good job of making the Odd Lots podcast.

2:10One day that person will have the mandate of heaven. How do I get more popular and successful? We do have the perfect guest. You're listening to Lots More, where we catch up with friends about what's going on right now. because even when the odd lots is over, there's always lots more. And we really do have the perfect guest. So I'm a big fan of Iranian food. I always wanted to go to Iran and actually try it. Yes. And it makes me sad that I haven't been able to do it. And with, you know, recent events, terrible events in Iran, we've had anti-Islamic Republic protests that have reportedly left thousands of people dead.

2:50I'm not going to say the specific estimate because it's changing all the time. And also there's not that much transparency at the moment because the government has shut down the entire Internet. But it's just sad. Look, I know very little about Iran. I also feel like in my professional career, there are multiple rounds of this. Big protests, etc. Is this the moment regime change? And to your point, which you say, like, there is very little that I trust when I see it reported. I am extremely skeptical. Oh, tonight was the biggest set of protests we've had in years. There's never been a protest.

3:28Look at which city this is. I'm sure there are well-informed people talking about this. I don't have the heuristics to note. Generally, I don't know who is well-informed, what is actually signal versus what is noise. But obviously, yet another sort of extraordinary development unfolding here in 2026. Matja, what have you been hearing? So I agree that it's difficult really to tell what are the actual facts. For sure, there's been a lot of deaths and it's horrible and it's tragic and it's definitely thousands of deaths. But at the same time, you know, there's complete blackout. What works right now is the actually outgoing landline calls, but with limited time.

4:11So, for example, one of my analysts who is actually in London at the moment, he's able to speak to his parents when they call him. And then the call gets interrupted quite quickly, but at least he can hear from them. We weren't actually sure for quite some time whether the stock market was working or not because of the blackout, because it was not possible to even to read any news from the official news agencies in Iran. so everything was down including from what i've read including even like the internal domestic like an internet network in iran that is uh that is very controlled this was this was also down even atm stopped working for a moment i think just like a one day brief moment cash transfers for working bank transfers apparently the local you know uber equivalent called snap was working all the time.

5:01However, GPS was not working properly, so it was difficult to locate the driver and so on. So exactly what you said, it's difficult to understand exactly what is going on. So this is, of course, Macha Voitl. He is the CEO of Amtalan Capital, which is a fund that specializes in Iranian equities. And there aren't that many of those around. I don't even know if there's a second one. Yeah, so we enjoy talking to him and he has really good insights into what is actually happening on the ground in Iran. The first question I should ask directly is, is your team OK? Are they safe and well, the people that you actually have in the country?

5:37Thank you for asking about that, Tracy. We have a local team in Tehran, part of which is actually in London at the moment. Now, analysts who are in Tehran, who were in Tehran, they left Tehran a few days ago when the protests were getting more intense to smaller cities, to their hometowns. So the last time we've heard from them was a couple of days ago. At that time, they were in a safe place. So I believe they're all fine. I mean, just your intuition. Let's actually set aside the question of like, is this a moment where the regime would get toppled or something like that? Does this feel either quantitatively or qualitatively different from various episodes over the last two decades in which suddenly the Internet is looking at fairly blurry videos of Iranian protesters and asking, Does this feel different somehow?

6:30Yes, it definitely does. So first of all, obviously looking at the history, it teaches you not to get excited or to, I don't know, hopeful for any meaningful changes. However, it does feel different. And maybe two things could be interesting here. First of all, as you said, Joe, at the beginning, it's not the first protest. It's another protest over the years. And if you look at comparable situations, for example, Poland. Poland is always close to my heart. I'm Polish originally. And Poland, when we were trying to get rid of the Soviet Union, it took nine years. And every year there was a massive protest.

7:09This protest, you know, died. And then, you know, with very brutal reaction from the government. Then the next year there was another protest. In the meantime, there was martial law with, you know, military on the streets and so on. But finally, many things came together and there was a tipping point at which everything collapsed. Although it didn't collapse, actually, it was a negotiated transition to a different regime. So, you know, the establishment got an off-ramp to move on and it was a peaceful negotiated transition. Similar in South Africa, based on what I know. I mean, it was, you know, happening in the 80s and then in the 90s, there were actual changes.

7:47In Iran, the situation is different because for many reasons, demographics have changed. So now you have, I believe, around 93 million people, out of which 50 million is between 15 and 49 years old, but like the active part of the population. And there are many more young people who are educated, who have access to Internet, have their own aspirations, and they don't believe they can achieve those aspirations in the current environment. And they also look at their parents and they think that they just wasted the whole generation, you know, waiting and doing nothing. So this makes them more angry and also like more decisive and confrontational.

8:31That's why I think it's, you know, the protests were so intense and so widespread. Another reason, another thing that's changed is like you remember a few years ago, So in 2023, there were protests around social freedoms after an Iranian girl, Mahsa Amini, died. And this was driven by basically by social freedoms and mainly involved young people. Right now, it's driven by economic difficulties. And this touches every single household in Iran. Yeah, I wanted to ask you about precisely this because the, I don't want to say the cause of the recent unrest, but certainly one of the sparks seems to have been a further collapse in the currency, even higher inflation.

9:20And wasn't there something about a bank as well? A bank that was going bust, supposedly with ties to the regime. How much did financial stress play into the current round of civil unrest? Well, 100%, this was the main cause. Look, the protest started on the Grand Bazaar in Tehran. So these bazares, I mean, people who operate bazaars, many of them run like multimillion dollar revenue companies there, actually. It's like this massive shopping mall with tens of thousands of, you know, smaller or bigger traders there. And they need stability to just, you know, do business, right? So protesting, revolution, like this is the last thing they would think about.

10:00But they are in a situation where many of them are importers. To import, you need to be able to obtain a hard currency to just pay your supplier from Vietnam, China, whoever. It's impossible to obtain, to access hard currency, or there's not enough of it. And that's obviously because of sanctions. Because of sanctions, exports of Iran just went down. Iran is exporting oil only to China. So China is dictating all the terms, including big discounts in the price that they are paying, but also the terms of the payment. You know, China is paying a big part of their payments are in yuan and they and they arrive in bank accounts in some Chinese banks.

10:39So Iran, you know, the only thing Iran can do with it is to buy some Chinese goods. And what Iran needs is to pay for essential goods like, you know, some food products or some medical products that they need to import at any cost. and once they allocate all their hard currency reserves to those essential products, there is not much left for other businesses. So this is one thing that is difficult to run a business when you cannot obtain currency. You have inflation running wild. But on the other hand, your consumers are losing their purchasing power at an extraordinary pace. So no one is buying, basically, right?

11:14You have to spend on eggs, milk and bread, probably more than 10 % of your average monthly salary. So it looks really difficult on the economic side. Can I ask very quickly, do you have a sense of what the current exchange rate actually is? Because, you know, this is one of the few currencies in the world that we cannot look up on a Bloomberg terminal. Yeah, it's around 1.5 million riyal per one dollar, which means it went down around 97, 98 percent over the last decade and around 50, almost 50 percent since before the war with Israel last year. So over the last seven months. So it's really it's really falling fast.

11:58Oh, and one more thing. You asked about the bank. Yes, actually, there was a bank collapsing in Iran just a few months ago. I mean, they formally recognized that it should be nationalized. And it's extraordinary because the size of the collapse, it was so big that it actually affected the budget of the country, the country budget for this year. So they had to reduce subsidies and just change the expenditures of the budget to make room for the amount that they had to, I think it was like$5 billion that they had to put into this bank so that it doesn't collapse. It was basically, and it's another example that, you know, makes people angry, obviously, because it was a huge example of corruption.

12:41So, you know, there was a local well-connected entrepreneur who was running a few construction companies. And it wasn't the case that, you know, he called a few banks and asked for some preferential loans. Now he set up a bank, offered the highest interest rates on the market. So many people just put their deposits into this bank. And then he was using those deposits to make loans to his own companies. I think it was like a majority of the loans were to his own companies. He built the biggest shopping mall in the region, which was, you know, a crazy idea from the beginning. And many things like this.

13:14So another example of thornism and corruption. This is the shopping mall that's like as big as the Pentagon or something? Yeah, twice as big. I read that Wall Street Journal article. Twice as big as the Pentagon, this luxury shopping mall in Iran suffering from massive hyperinflation and all sorts. But I have to say, starting your own bank to then just fund your construction company, A, kind of a brilliant idea. B, this is why bank supervision and various things. Is important. Actually exist.

14:18Thank you.

14:23Barclays Brief wherever you get your podcasts. Hey there, Oddbots listeners. As we come into 2026, we are realizing that one thing we're constantly thinking about on the show is how companies actually get built. Not just like the headline version of that story, but the messy operational reality of it. Right. We love messy operational reality of things. The never-ending quest to dive deeper, how companies make it big, what causes one company to succeed, why others fail. I have good news. That is exactly what the Acquired podcast does. Ben Gilbert and David Rosenthal pick a company and then explore all the ins and outs of its trajectory.

15:09Lots of detail there, how it scaled, the ups and downs, and so much more. Yeah. And we actually, we had them on OddLots back in February last year. We talked to them about everything from TSMC, NVIDIA, Mars, Hermes, scale, capital structure, the importance of incentives, all of the different, I guess, ingredients that go into some of the success of these names that we talk about every day. Also, their show actually turned 10 years old in 2025, just like us. So we're, I guess, the same age in podcast years. Big year. Anyway, if you like OddLots, the way we get into various market dynamics, how the economy actually works under the hood.

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16:04It's surreal to me, the surreality of here is a country that right now is a de facto the information black hole. You mentioned, we don't know if the stock market is trading. Here's a country on earth. And right now, where we are in New York or where you are in London, we can't even answer the simple question, is the stock market functioning right now? Yeah, exactly. So all the stories that I hear is that the way people were able to communicate is because someone had access to a Starlink operating in Iran, or someone's friend was working at a hospital, and a hospital had some access to either the wide internet or some at least local networks.

16:46So that's why also it's not possible for the country to keep the blackout at this scale and intensity for too long, because, you know, the whole economy stops, right? Actually, the administration of the countries is not possible, right, without the internet. So it was sharp, intense, but it has to be short term because otherwise, you know, the country will just stop. What happens to your portfolio in this particular scenario, your investments? So the stock market seems to have been stable over the last week. I don't see the exact numbers yet in terms of, for example, liquidity. And I suspect that, you know, there was not much going on because I'm not sure if even local investors had a chance to, were able to put orders online, Maybe it was old school, calling your broker or going to your broker.

17:36So it was stable. So nothing actually went up by 4%. And the currency was stable too. The currency is easier to manipulate by the central bank using some reserves, especially when there is low liquidity. So I think what will be more interesting is the next few weeks. So, for example, what happened last year after the war? When there was a war between Iran and Israel in June, the stock market was shut down for around two weeks. After it reopened, the prices didn't change much. But then local investors, mainly retail investors, this retail-driven market, started selling because they didn't have access to their funds.

18:17So they started selling at any price just to get money out. and there was a massive selling pressure that lasted from july until september and when the buyers saw a selling pressure like this so every day you can see the queue of unfilled orders building up that will go to the next day and the next day and the next day the sort of people just stopped buying as well obviously so the market went down like irrespective of you know which stocks what quality what valuation whatever just a massive sell-off which lasted two three months and then it rebounded. So it went down like in dollar terms from let's say index of, I don't know, 360 to 230.

19:00Yes, if I'm looking at this correctly. So let's say 36 % in dollar terms in just two and a half months. The selling pressure then was exhausted. All the selling, all the sales were absorbed. Valuations went down to one of the, I think very close levels to the like all-time lows in the history of the Iranian stock market, which is around 20 years old. So, you know, it's always cheap, right? But this time it went, you know, below three times net earnings, a median for the market, right? So you could probably find stocks, you know, at two times earnings. Then it rebounded, but it's still around, you know, like three and a half times earnings.

19:38So valuations are very much still driven by war. So everything is priced for war, right? So that's the sentiment hasn't really recovered after the last war and now we had protests. So everything in Iran is priced for war, basically. You know, in the news, obviously, we hear or I think we get a better grasp. And again, I plead a lot of ignorance. It's not something I have a lot of familiarity with. But what the protesters want, you hear about young people and wanting more freedoms. Can you give a sort of, I don't know, political economy breakdown of like, you know, you don't hear about the people who obviously don't want regime change.

20:16Generally speaking, we don't know much about them or who they are. Who are the sort of different factions socioeconomically that and how they allocate to either side? Sort of, I guess, a class understanding of the tensions. So there's a big group of young people and young people want freedom and opportunities and like fair rules in the economy basically there are older people adults in larger cities which are more liberal definitely tehran tehran is a big city it's like 12 million people all together and tehran life in tehran looks different to most other cities in iran with you know women no longer wearing hijabs It's much more open.

21:03It's much more liberal. But also, there is a big group of people who are very, very religious. And they support the government that is also... There is a religious government. So the concept of Islamic Republic is very close to their heart. And they support it. And it's part of their religion and part of their traditions. So in terms of how they observe religious holidays, going to mosque, dressing in a certain way. and so on. And now, how does this split? I would say that probably between 10 and 30 percent is the religious part. 10, like, very religious, and just listening to the prayer and, you know, whatever political advice comes from the mosque and so on.

21:5030 percent of them, let's say, a third of the society just being religious and supporting the Islamic Republic as a religious state. Just a small note that it's an Islamic republic, but very tolerant of other religions. I mean, all the churches work normally there from Jewish to Christian to Zoroastrian. You know, everyone is doing his own thing in terms of religion in Iran, and it's okay. And the rest are people who want a modern, open state, including the young people who want it fast, basically, and want to be able to follow their dreams and aspirations. So that would be the breakdown. So I should just say we're recording this on January 15th.

22:32The headlines are coming pretty fast nowadays. So who knows what will happen by the time we publish this episode in just 24 hours or so. But the latest headline is that tensions seem to have eased a little bit with the U.S. because the Iranian government said they're not going to kill any more people or told Trump they're not going to execute more people. How should we interpret that? Is this all over or do you expect some unrest to continue? Well, it's hard to predict. It's very unpredictable. I mean, unrest is difficult to predict, the dynamics around the unrest. Then, you know, the government of Iran is difficult to predict.

23:11But, you know, the government of the U.S. is difficult to predict because, you know, right now, yesterday, today, yesterday, you had news that President Trump was saying that yes he got information that you know killing stopped so this is what he was you know what he wanted to achieve so it looks better the day before everyone thought that you know they are getting ready to strike iran so i think those things can change in 24 hours so it's it's just impossible to predict the only thing i would i would say is that because it does feel different this time the scale of the protests and the reasons of the protests and also the government just can't spend their way out of the problem.

23:51It's the financial situation is really tough. But some changes are likely. I'm not saying that we're in the next few days or weeks. Maybe it will take months. But I think it's just moving this direction. So there are some changes that are likely. And many scenarios are possible. I mean, look at Venezuela. There was no regime change there, right? I mean, there was a, again, negotiated solution with Maduro taken out. and the rest of the government and establishment just stay in place, but they have to cooperate, right? So there's probably more than one scenario possible for the future. What a world we live in where civil unrest is becoming a major investment theme.

24:33Thank you, Maca, for coming on Lots More. Really appreciate another update from you. Thank you for having me.

24:44Lots More is produced by Carmen Rodriguez and Dashiell Bennett with help from Moses Andam and Kale Brooks. Our sound engineer is Blake Maples. Please rate, review, and subscribe to OddLots and Lots More on your favorite podcast platforms. And remember that Bloomberg subscribers can listen to all our podcasts ad-free by connecting through Apple Podcasts. Thanks for listening.

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