Iran's Financial Trading Bourse Eyes Overseas Cash Injection

The Tehran Stock Exchange (TSE) will try its utmost to befriend investors as it attempts to beef up its financial markets. The sanctioned nation has been striving to build its troubled economy since the pile up of prohibitions, the move aiming to promote Iran as a viable investment destination.

Emerging market nations continue to attract global investment capital as investors look for new opportunities, however, Iran isn't the preferred destination of choice due to its mannerism with neighbours and its fetish for materials that could destruct. However, the country is using its offshore counterpart, the Kish island, a free-zone, to give investors a taste of Iran without the Ayatollah himself.

The TSE welcomes global investors to the island for an investment conference in the latter stages of October. The move follows on from recent visits by Russian financial institute, Renaissance Capital and delegates from Korea’s Securities Depository who also visited the TSE’s trading floor.

“TSE will hold its program to introduce methods and benefits of financing at Tehran Stock Exchange," explained Hamid Rouhbakhsh, International Director at the TSE, in a statement when speaking about the TSE and the investment conference.

New President

Iran has gradually been coming out of its shell since its newly elected president took office. Hassan Rouhani, pictured, has added a touch of stability to the nation that saw inflation spike to 40%. Since coming into power, Mr. Rouhani has introduced a number of reforms signalling a change in the governance of the outlawed state. Inflation has dropped to a modest 23% and the government forecasts a recession-free Iran, by 2015.

Iranian stocks have seen major swings since the new president showed up. Last year the market increased over one hundred percent as domestic investors flooded the bourse on news of possible progress and reforms, however, markets have since retracted with double digit declines year-to-date, on the back of low-Volatility in global markets, along with uncertainty in the energy markets as trouble in Iraq continues.

“Kish Island is a free zone in the Persian Gulf, and foreign investors do not need entry visa to the region; therefore, they will be able to easily attend the event," added Mr. Rouhbakhsh.

For firms cautious of dealing onshore in Iran, the island opens up opportunities with foreign banks, furthermore, overseas investors are also able to open an Iranian rial or foreign currency bank account in the island.

Iran is one the Middle East’s sleeping giants, as the nation undergoes changes under its new chief and looks to forge opportunities with regional trading partners, domestic investors are taking heed of a volatile stock market. However, Iranian investors have been attracted to the global derivatives markets for quite some time. According to Forex Magnates' research the practice is still common among Irani traders as they bypass local and international rulings.

Emerging market countries have been dependant on funding from the west, however like Russia, Iran is looking at eastern neighbours for funding. The Russian-China trade has expanded significantly with new records on the cross currency futures contract traded on the Moscow Exchange.

Iran’s nuclear weapons dilemma is set to be rectified under international rulings, the prospect of the seventy million plus nation being high on the agenda for global investors as Iran holds prominence in the region as a potential for growth, coupled with the slowdown in China, investors are looking for new markets to park their capital.

The TSE has seen an influx of interest during the last 6 months, with more than 120 foreign delegates, including global capital markets' authorities, fund managers and investors having visited TSE and Tehran Stock Exchange, as well as participation in the Iranian capital market.