June 19 (Bloomberg) -- Iranian stocks, which have risen 145 percent since January 2003, fell today on concerns former Tehran mayor Mahmoud Ahmadinejad may be elected president of the nation with the world's No. 2 oil and gas reserves.
Ahmadinejad, 49, who wasn't among the leading candidates in pre-election polls, will face former president Akbar Hashemi Rafsanjani in a final round of voting this Friday, June 24. The first round, with seven candidates, occurred June 17.
Ahmadinejad stands ``for basically everything investors fear,'' said Albrecht Frischenschlager, a partner at Tehran- based Atieh Bahar consulting, who advises companies such as British-American Tobacco Plc and Rolls-Royce Group Plc. ``People are obviously getting a bit worried because of the (first-round) result,'' he said in a telephone interview.
In the first round, Rafsanjani took 21.01 percent of the vote and Ahmadinejad 19.48 percent.
The Tehran Stock Exchange index fell 61 points, or 0.5 percent, to 12402.5 today, erasing the gains of the three days preceding the first round. The exchange was closed yesterday and Friday, June 17, for its regular weekend.
Ahmadinejad is regarded as a supporter of ``a hardline policy on international affairs, such as the nuclear issue and ties with the U.S.'' and an opponent of privatization and economic liberalization, Frischenschlager said.
In contrast, investors ``know that Mr. Rafsanjani is in favor of privatization, in favor of economic liberalization,'' Hussein Abdoh Tabrizi, the stock exchange's secretary general, said today in an interview at his office. ``Even if Mr. Ahmadinejad says everything that Mr. Rafsanjani is saying, it's not enough for the market because one of them has already done it, while the other hasn't.''
Rafsanjani
Rafsanjani, 70, served as president from 1989 to 1997. During that time he opened ``the economy too fast, without proper control mechanisms,'' Frischenschlager said. ``He made a lot of mistakes, but he might have learned from them. Now things are more institutionalized, and that should prevent excesses.''
When Rafsanjani announced his presidential candidacy on May 10 the stock exchange index rose 40 points.
Rafsanjani currently heads the Expediency Council, Iran's top political arbitration body, and is deputy chairman of the Assembly of Experts, which appoints Iran's supreme leader.
Abdoh Tabrizi said he had received a call earlier in the day from an Ahmadinejad aide, whom he declined to name, to reassure him that Ahmadinejad as president wouldn't ``want to do any harm to capital markets.''
Revolutionary Guard
``It shows he's worried about it,'' Abdoh Tabrizi said.
Ahmadinejad is a former fighter in the nation's Revolutionary Guards, the element of the military most loyal to the country's ruling Islamic clerics. Unlike Rafsanjani, he opposes detente with the U.S. He said yesterday he would oppose membership in the World Trade Organization should it hurt Iran's economy.
The Tehran exchange opened in April 1968 under the regime of Shah Mohammad Reza Pahlavi and halted in 1979 after Islamic revolutionaries took control of most of the economy and banned interest payments. It was revived in 1989, the year Rafsanjani became president. The index was set at 100 in 1990.
The index climbed 116 percent in 2003. It advanced 7.3 percent last year, as the U.S. pressured the Iranian government over its nuclear-energy program and a new parliament was resistant to accelerating economic reforms, Abdoh Tabrizi said.
The index has a market value of 404,852 billion rials ($45.1 billion), with a total of 423 companies listed.
Bond Trading
Abdoh Tabrizi, sitting on the fourth floor of the exchange's 19-story building in central Tehran, said all its products are ``compliant with Islamic codes.'' Islam bans interest, which it equates with usury, and aims to encourage lenders to share in the risk of projects by becoming shareholders.
The exchange will expand its activities in ``coming days,'' Abdoh Tabrizi said, by trading company bonds for the first time ever, starting with Iran Khodro Co., the country's main carmaker, and cement maker Siman Sepahan Co. -- two companies whose shares are already traded on the exchange.
``We are trying to make the market more multi-product'' oriented, Abdoh Tabrizi said.
This year for the first time, foreigners will be able to buy directly up to 10 percent of companies listed on the exchange.
To contact the reporter on this story:
Marc Wolfensberger in Tehran at mwolfens@bloomberg.net
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Britain, Germany, UAE deny refusing fuel to Iran planes
Iran Stocks Fall; Concern With Presidency Candidate Ahmadinejad
6/19/2005 
Bloomberg 
