(photo credit: AP)
International sanctions notwithstanding, the Teheran Stock Exchange has reached
its highest record, crossing the 16,000 point mark, according to Iranian media
The Stock Exchange Index gained 188 points in early Monday
trading, manifesting a steady growth over the past two years, reported Press TV,
an Iranian news channel. The market has jumped 28 percent since March 20, the
The Iranian report attributed the rise to a government
decision to sell off 18% of its equity in two automobile companies – Iran Khodro
and Saipa Automotive Manufacturing – as well as by low bank interest rates and
declining investment in the housing sector.
The report came as somewhat
of a surprise following UN Security Council sanctions imposed on Iran on June 9
and subsequent EU and US sanctions.
European sanctions prohibit the sale
of equipment, technology and services to Iran’s energy sector.
success of the stock exchange is not taking place despite the sanctions but
partly because of them,” David Butter, regional director of Middle East and
North Africa in the Economist Intelligence Unit, told The Media
Iran had a market largely driven by local investors who are
transferring their funds, formerly invested abroad, back to Iran, he
These funds were mainly being brought from the United Arab Emirates
and Dubai, which has made it difficult for Iranians to continue to invest
Butter cited the crash in the Dubai real-estate market as another
reason for heightened investor tension.
“Iranians feel their money is
safer back home,” Butter said.
Seyed Muhammad Marandi, an associate
professor at the University of Teheran, said the flourishing of the Teheran
Stock Exchange was a sign “sanctions have not had the effect Western countries
had wished for.”
“Many in Iran believe the country should have decreased
trade with Europe earlier, because the future is in Asia,” he told The Media
The sanctions had also diverted Iranian businesses to new markets
in Latin America, Africa and the Far East, which maintain better relations with
Teheran, Marandi said. Sanctions also had instigated Iranian self-reliance and
boosted Iranian research in fields of nanotechnologies, satellite technology,
stem cells and military industries, he said.
“Without the sanctions, Iran
would probably never have developed a hi-tech market,” he said.
Rossi, an expert in International Economics in Chatham House, attributed the
success of the Iranian stock exchange to high oil prices and a sense of a
diminished chance of a military strike on Iran’s nuclear apparatus.
on purchasing Iranian exports would likely be an ineffective sanction, as was
the case in similar attempts in the past, she said.
“It is hard to
enforce sanctions on countries like Iran that import a homogeneous, easyto- sell
product like oil,” Rossi told The Media Line.
The strength of the Iranian
economy was influenced more by local government’s management of the economy than
by external factors, she said, adding: “The recent criticism of Iran’s internal
economic policy hasn’t seemed to affect the economy’s performance.”