Sanctions against Iran have done nothing to dent a boom in its stock market, as investors bet on a continued rise in company stocks which have been undervalued for years, the head of the Tehran bourse said. The market hit its latest record on Monday, with the TEPIX index closing up 1.29 percent on the day, the highest in its 20-year history, an official said.
New record high reached on Monday New trading instruments, privatisation's and several IPOs helped the Tehran Stock Exchange's main index rise 57 percent last year, Hassan Ghalibaf Asl said, adding that the latest round of sanctions - some of which target financial services - had not harmed the market.
"Sanctions are a political risk, they have their own special bad effects on the capital market. But, you know, after the sanctions (came in) it didn't affect the indexes," Ghalibaf Asl told Reuters in an interview in his office at the bourse. The sanctions from the United Nations Security Council, the United States and the European Union aim to put further pressure on Tehran over its nuclear programme, which the US and its allies see as an attempt to make an atomic bomb.
Iran insists the programme is needed to provide electricity and that it does not want nuclear arms. The Tehran Stock Exchange's main index continues to rise and is up 27 percent since March 21, the start of this Iranian year. Ghalibaf Asl, who is heading a drive to increase foreign investment, said the sanctions had not made it harder for people outside the country to trade shares.
"In the new (sanctions) legislation there are no restrictions for foreign investors to come to invest in Iran," he said. Foreign investment makes up 0.5 percent of the stock market. In fact, while the sanctions were being passed in Brussels, Washington and New York, Iran eased regulatory restrictions on foreign investors.
Among the new sanctions, the US effectively deprived foreign banks of access to the US financial system if they do business with key Iranian banks or Iran's elite Revolutionary Guards. And EU measures set limits on the transfer of funds into Iran, requiring any transfer of over 40,000 euros to have prior government authorisation.
Sectors represented on the exchange, which has a market capitalisation of more than $70 billion, include carmaking, banking, steel, telecommunications and petrochemicals. In April, an official said Iran aimed to raise $12.5 billion this year by selling state firms, including two refineries.
But analysts said some of them may simply end up being transferred within Iran's vast public sector. With an average price-earnings ratio of six, Ghalibaf Asl said Iranian stocks are attractive to investors inside and outside the country - even if Iran faces major geopolitical uncertainties and the constant risk of more sanctions.
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