Privatisations and increased company profits have helped to push up Iran's stock market, its head said on Tuesday, despite global financial turmoil and international sanctions imposed on the Islamic Republic.
Ali Rahmani, managing director of the Tehran Stock Exchange, said the market's total capitalisation had jumped to $70 billion in August from $40 billion in January last year.
"A lack of international relations here is actually a strong point for our stock exchange," Rahmani told Reuters in an interview when asked how Iranian shares so far had escaped the panic gripping many other markets. The all-share TEPIX index is up by around 20 percent this year, while still down from a 2004 high, according to the Tehran Stock Exchange website, www.tse.ir.
Analysts have said Iranians with cash abroad, fearing having assets frozen because of tightening sanctions on Iran, have repatriated some of their capital from Western markets and invested in property and other assets, fuelling price rises. Rahmani said a drive to speed up the sale of state-owned companies, which he said got under way in 2007 with the part-privatisation of Mobarakeh Steel Co and National Iranian Copper Co, had boosted interest in shares. The sales coincided with rising commodity prices internationally, pushing up corporate profits. "People rushed to buy shares of those companies," he said.
Rahmani also said the stock exchange wanted to encourage foreign investment and planned to hold road shows, "if the international political atmosphere gets better regarding Iran." Iran, the world's fourth-largest oil exporter, tried to shake up its lumbering economy four years ago by overturning Article 44 of the constitution which decreed core infrastructure should remain state-run.
The ruling allowed privatisation of downstream oil and gas sectors, mines, banking, insurance, telecommunications, railway, roads, airlines and shipping.
Rahmani, speaking through an interpreter at his office in a Tehran high-rise which also houses the trading floor, said shares worth $6 billion had been sold so far during the 2008-09 Iranian year that started in March.