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Capital Markets

Iran: Tehran stocks boom

TSE main investment focus; Privatization continues to flow

Iran’s stock market is one of the bourses least correlated with other world markets – and the more sanctions are imposed, isolating it further, the more it is surging.

By the end of August, the Tehran Stock Exchange had risen by more than 50% in 2010, with trading triple the volume of 2009. Total market capitalization has surpassed $80 billion, a record high.

This is despite both the EU and the UN imposing new sanctions on the country over the summer. It is also despite official statistics showing unemployment at a 13-year high of 14.6%, up from 11.1% a year ago.

The IMF expects Iran’s economic growth to stay at about 3% for the next five years. This compares with annual growth rates of 5% and higher before the crisis. The latest data from the central bank show annual inflation in Iran at 9.4% at the end of July.

Lack of alternatives

One theory is that the stock market is booming because of the lack of alternatives, especially as international sanctions make investment abroad more difficult.

Ramin Rabii, managing director at local investment firm Turquoise, says the central bank’s decision in April to allow local commercial banks to lower deposit rates has pushed Iranians to seek higher returns from the stock market.

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