Domestic Economy

Iran Capital Market Value Surpasses $165b

Much of the growth owes to the nuclear deal Iran signed with world powers in 2015, which led to the removal of years of sanctions against the country early last year
 Shapour Mohammadi Shapour Mohammadi
The number of equity traders rose 67% to 10.849 million since Rouhani became president

The value of Iran’s capital market grew by more than 160% to over $165 billion since Hassan Rouhani took office as Iran's president in August 2013, the chief executive of Securities and Exchange Organization said.

Speaking in a press conference on Tuesday, Shapour Mohammadi added that capitalization in fixed-income funds exceeds $31.2 billion of the overall market capitalization.

Furthermore, the number of equity traders rose 67% to 10.84 million in the Rouhani administration, IRNA reported.

Much of the growth owes to the nuclear deal Iran signed with world powers in 2015, which led to the removal of years of sanctions against the country early last year. The sanctions were lifted after Iran agreed to limit the scope of its nuclear works.

"The share of foreign investors in Iran's stock market stands at about $315 million," Mohammadi said.

According to chief executive of Central Securities Depository of Iran, Mohammad Reza Mohseni, the number of foreign entities investing in Iran's capital market has increased 42% since the removal of sanctions on January 16, 2016.

"Latest statistics show 264 foreign investors received trading codes over the past year, which shows a 42% rise compared with the corresponding period of the previous year," he said last month.

Germans constitute a considerable segment of foreign investors in Iran's securities market. Apart from Germany, investors from the United States, the United Kingdom, Spain, Russia, Switzerland, Sweden, Uzbekistan, China, the Netherlands, India, Turkey, Lebanon, South Africa, Japan, the UAE, Norway, Greece, Poland, Hong Kong, Iraq, Pakistan, Syria, Luxembourg, Kuwait, New Zealand, Malaysia and South Korea are trading in Iran’s equity market.

Foreign investment has also been on the rise, as it increased from $10.16 million to $338.98 million since 2013. 

Mohammadi described the 32-fold growth in FDI attraction as “impressive” and said there is still a great deal of untapped potential in Iran’s equity market for absorbing foreign capital.

According to chief executive of Iran's over-the-counter Fara Bourse exchange, Amir Hamouni, IFB has attracted 5 trillion rials (about $125 million) in foreign investment since Implementation Day–the day nuclear sanctions were rolled back.

Hamouni said half of the figure pertains to the exchange's debt market and the rest has gone to its stock market.

"Most of the investors have come from Germany, Persian Gulf littoral states and East Asia," he said.

Investment in Iran's equity market has been made easier. Foreigners, who choose to do business in the country, can now open bank accounts in Bank Mellat’s branches across the world and when they decide to buy securities, the bank will exchange their money to rials at open market rates within a day. The bank will apply the average daily exchange rate provided by the Association of Bureaux de Change Operators of Iran.

Subsequently, Mellat will wire the money to CSDI's account with the bank and buy the ordered securities. CSDI will then issue ownership certificates for the securities in the foreign investor's name, as it does with Iranian traders.

According to Mohseni, the foreign exchange risk will be borne by foreigners and the bank will only act as broker.

As one of Iran’s largest lenders, Mellat signed the FDI facilitation contract with the Central Securities Depository of Iran back in November 27.


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