TEHRAN: 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. New trading instruments, privatizations 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. 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 program, which the U.S. and its allies see as an attempt to make an atomic bomb. Iran insists the program is needed to provide electricity and that it does not want nuclear arms. "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 Tehran Stock Exchange's main index continues to rise and is up 27 percent since April 21, the start of this Persian 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, New York, and Iran eased regulatory restrictions on foreign investors. "I believe that in the view of the new legislation there is a new opportunity," Ghalibaf Asl said, adding the deregulation increased trade. Among the new sanctions, the U.S. effectively deprived foreign banks of access to the U.S. 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 authorization. Sectors represented on the exchange, which has a market capitalization of more than $70 billion, include car making, 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. "I think the opportunities and good factors that are affecting the growth of the capital market and attracting investors there are more important, and the weight of them is more, than bad factors," he said. Ghalibaf Asl also said the price-earnings ratios showed stock prices were not over-inflated and that he didn't think the stocks boom was a bubble. And while the political risks remain high in Iran, the upside possibility of a normalization of Iran's international relations could be even bigger than the current upswing, he said. "I am sure that after (sanctions are abolished) the capital market will rise high," he said. "In the past we experienced a price-earnings ratio of eight in our capital market, maybe it is also possible in future, but without sanctions." Additional reporting by Ramin Mostafavi
