Political uncertainty brings jitters to Iran markets    Thu. 21 Jul 2005


Iran Focus

Tehran, Iran, Jul. 21 – The Tehran Stock Exchange (TSE) has suffered another plunge this week, as political uncertainty over the future of nuclear talks with Europe and growing indications of ultra-conservative figures sweeping all the key positions in the new cabinet of President-elect Mahmoud Ahmadinejad continue to frighten investors.

On Monday, the market’s TEPIX all-share index slid by 51.3 points, the biggest loss in a single day since the elections, wiping 1,600 billion rials (or 183 million dollars) off the value of stocks.

The market has not yet recovered from a massive panic selling that followed the election victory of the ultra-conservative camp on June 24. Since then, the TSE index has been losing an average of 43.5 points a day, amounting to a total loss of 1.8 billion dollars.

“Investors and entrepreneurs are extremely worried”, said Mohammad-Mehdi Behkish, a university professor and chairman of
Iran-Italy Chamber of Commerce. “The psychological shock created by the president elections results could have far-reaching and irreversible consequences for Iran’s economy”.

Comments by Ahmadinejad’s top political and economic advisers and hard-line newspapers have only added to market jitters in
Tehran. In a Tuesday editorial, the influential daily Kayhan challenged the European trio – France, Germany and Britain – to send Iran’s nuclear file to the United Nations Security Council.

“Nothing will happen in the Security Council”, the ultra-conservative daily wrote. “The only thing that will happen is that we will be able to resume our suspended activities and quickly reach results. The Security Council will open up big avenues in front of us, but the Europeans will lose the only option that they now have”.

Analysts say Ahmadinejad’s populist message and his daily pledges of “an unprecedented anti-corruption campaign” are rattling nerves within the business community.

“They just don’t know what these guys will be up to”, Hossein Moshiri, a Dubai-based financier said in a telephone interview. “To be seen by the public as having done something, Ahmadinejad and his men will need someone to pounce on. Right now, the business community looks like a fair hunting ground”.

Moshiri does not see any prospects for the return of calm to the stormy markets before the middle of autumn. By then, he says, the future of nuclear talks will be clearer and the orientation of Ahmadinejad’s cabinet will be easier to read.

“Even Rafsanjani’s allies in the Bazaar will not be getting much sleep before then”, Moshiri said.