Economy, Business And Markets

Swiss Delegation Scopes Out Iran’s Capital Market

Analyst at Securities & Exchange Organization
Swiss Delegation Scopes Out Iran’s Capital Market
Swiss Delegation Scopes Out Iran’s Capital Market

Two months after the visit of Swiss President Johann Schneider-Ammann to Iran, a high-ranking delegation from the European country, led by Pierre Maudet, Geneva’s councilor in charge of security and economy, arrived in Tehran on April 24 for a five-day stay.

The delegation’s request to become familiar with Iran’s capital market mechanism was coordinated by Iran-Switzerland Chamber of Commerce, and the Securities and Exchange Organization of Iran.

Over 40 economic players and managers from various sectors, including capital market, banking, transportation, agriculture and tourism, met with SEO’s chairman and deputies at its headquarters on Wednesday.

In his opening remarks, Mohammad Fetanat, the SEO chief, explained that in the light of the nuclear agreement, Iran has become a more alluring destination for foreign investment, noting that the country is one of the last frontier markets in the world.

“Iran’s systematic risks are being rooted out and investment returns are unparalleled,” Fetanat said.

Addressing the meeting, SEO vice chairman for international and foreign investment affairs, Bahador Bijani, quoted the Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei as saying: “The Iranian people have a positive impression of the Swiss government … The Iranian government would give its full support and provide every legal guarantee about the enforcement of agreements between Tehran and Bern.”

  Sukuks in the Limelight

In a presentation about the Iranian capital market, Fetanat referred to sukuks (Islamic bonds) as the best investment vehicle for foreigners. Citing last year’s successful issuance of $1.47 billion worth of Islamic Treasury Bills, which are sold at a discount with short-term maturities of up to a year, he described the state-backed bonds as the most appealing form of sukuk.

The government has recently issued another form of sukuk known as Ijarah. $140 million worth of the Islamic securities were sold out in a matter of seconds on April 23.

Fetanat said the main difference between sukuk and conventional fixed-income securities is that the former is less risky and more collateralized.

“There has not been a single case of default in the Iran sukuk market,” he said.

The sukuk’s rate of return ranges from 18% to 25%, many of which have guaranteed floor yields.

  International Compliance

“The SEO recently became an associate member of the International Organization of Securities Commissions. There was a universal set of criteria with which Iran’s capital market proved to be compliant. Not to mention the fact that there are three pivotal objectives for the IOSCO, including the protection of investments,” Bijani remarked.

“Helping the members to better conform to higher standards is the essence of IOSCO. These prove that Iran’s capital market regulations and standards have met international requirements, which is a reassurance for foreign investors.”

It was also added that with the launch of dollar and euro-based derivatives, there will be a better chance of hedging currency exposure risk.

In the end, Fetanat pledged that SEO will do everything within its power to facilitate the process of Swiss investors tapping into Iranian markets.