Economy, Business And Markets

Iran Capital Market Set to Unlock Vast Potential

Analyst at Securities & Exchange Organization
Iran Capital Market Set to Unlock Vast Potential
Iran Capital Market Set to Unlock Vast Potential

Head of Securities and Exchange Organization of Iran, Mohammad Fetanat gave a speech as a keynote speaker at the so-called 'IFN Issuers Forum 2015' hosted by REDmoney – a leading company organizing events on the Islamic financial markets across the globe – in Dubai on September 13.

The one-day forum brought together the Islamic finance industry’s elite and leading issuers, arrangers and financial intermediaries to discuss innovation in transactions, asset classes and Sharia rules. The participants gathered to address current trends in Shariah compliant capital raising, analyze key features of global landmark deals and recognize highly successful transactions in the global Islamic debt capital markets.

The importance of such forums stems from the fact that the industry is rapidly expanding insofar as Islamic finance grew from less than $15 billion in 2010 to more than $20 billion in 2014 while issued sukuk value has experienced the compounded annual growth rate of 33% for the last 10 years.

Sharia compliancy is becoming the focal point even in many non-Muslim countries. Britain, South Africa, Hong Kong are among the first countries with world-class capital markets that have tapped into global Islamic debt market.

Fetanat started his speech by praising the triumph of diplomacy and good faith in Iran nuclear talks with world powers, which led to the July 14 landmark deal, calling it a win-win accord grounded in mutual respect and a desire for peace.

“This accord has opened the way to Iran that is broadly engaging and connecting with the world again and we anticipate full implementation of the deal in the near future,” said the SEO head.

Fetanat continued by stating that as a result of the nuclear agreement, Iran has hosted ministerial and presidential delegations from Germany, France, Italy, the UK, Switzerland, Spain, Austria, Japan and the Czech Republic to name a few. He pledged that SEO will continue to do everything within its power to facilitate the connection of interested delegations to different sectors of Iran’s economy.

Iran’s geographic situation with 20 million educated population in addition to vast oil, gas and mineral resources were mentioned by Fetanat as a few reasons for investors’ interest in Iran’s untapped market.

“Numerous analyses like the one by Goldman Sachs predict that Iran is poised to be placed among the world’s 12 fastest growing economies,” he noted.

“Under the sanctions, Iran managed to follow the guidelines of the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei on Resistance Economy by establishing a knowledge-based economy, relying on domestic capacities and cutting dependence on oil revenues,” he added.

Fetanat emphasized the thorough Sharia compliancy of Iran’s capital market, referring to the country’s Sharia Committee and the different kinds of sukuks worth $34 billion issued in Iran. The committee oversees all market segments from the development of a new financial instrument to the function of every financial intermediary, which in fact ensures elimination of any deviation from Islamic laws.

He went on to reveal latest statistics on Iran’s capital market: The equity market comprises 380 companies (318 at Tehran Stock Exchange and 62 at Iran Fara Bourse) from 41 diverse industries with a cumulative market value of $104 billion. Moreover, there are 108 brokerage houses, more than 120 registered funds and nine local investment banks.

On foreign investment, Fetanat said SEO is working closely with local and international credit rating agencies to develop relevant regulations to facilitate foreign investment.

He concluded his speech by announcing SEO’s plan to hold an international conference early next year and hosting foreign investors and market participants to discuss opportunities arising from the opening up of Iran’s capital market. He invited all participants in the forum to take part in the upcoming event.

The SEO head also met with Indonesia’s Minister of Finance Bambang Brodjonegoroa on the sidelines of the forum to exchange ideas and pave the way for more cooperation between the two countries.