Relations between Iran and Turkey are growing, as the neighbors shrug off differences on international politics to boost cooperation in economic fields.
Regulator Capital Markets Board of Turkey signed a cooperation agreement with Tehran Stock Exchange on Wednesday, Mehr News Agency reported.
CMB is the regulatory and supervisory authority in charge of the securities markets in Turkey.
CMB and TSE agreed to create an easy route for Turkish investment in Iranian securities. Based on the agreement, master-feeder fund structure will be created to funnel Turkish money to Iran’s securities markets. The master fund will be set up in Iran while the feeder will be created in Turkey. Shares in the fund would be sold to the public only by the feeder fund, but invested through the corresponding master fund.
The master fund will oversees all portfolio investments and trading activity. It will initially focus on Islamic Treasury Bills and other forms of Islamic debt financing, sukuk, and then expand to equities and other available securities.
A master-feeder fund is a structure commonly used by hedge funds to pool investment capital raised by investors and overseas investors into one central vehicle called the master fund, with separate investment vehicles or feeders created for each investor group.
Turkish lender Takasbank and the Central Securities Depository of Iran will carry out the clearing process for the investments on each end of the master-feeder structure. The bank mainly provides clearing, settlement and custody, as well as central counterparty and banking services to its members in Turkish capital markets. CDI has a similar role in Iran.
Neighbor and Natural Trade Partner
In tandem with the deal made between the two countries’ capital market authorities, representatives of Turkey’s largest business organization visited Iran to boost economic and trade ties with the neighboring country in the post-sanctions era, the Turkish daily Hurriyet reported.
The delegation from the Union of Chambers and Commodity Exchanges of Turkey’s (TOBB) was chaired by Rifat Hisarcıklıoglu. He described Iran as Turkey’s “natural trade partner.”
“Iran is both our neighbor and natural trade partner. We can boost our economic, trade and investment relations with our Iranian counterparts. We have seen this potential and held a series of key meetings to realize this potential,” said Hisarcıklıoglu in a written statement on March 3.
He noted that it is “almost impossible” to find a vacancy in Iran’s hotels as the country has been receiving thousands of business delegations from many countries, including Italy, Austria and many others.
Deals and Prospects
Foreign business delegations have flocked to Tehran since the United States, the European Union and the United Nations lifted international sanctions in January after reaching a deal to curb and monitor Iran’s nuclear energy program.
A number of global companies have already signed business deals with Iran, among them aircraft maker Airbus, which is selling 118 passenger planes to Iran with financing from Italian insurer Sace.
The International Monetary Fund expects Iran’s economy to expand 4.3% this year, with growth at or above 4% in the next two years. It also sees Iran’s imports expanding 18% this year, 14% next year and 7% a year after.
Roadmap to Boost Ties
TOBB Secretary-General Mustafa Saracoz, Economic Policy Research Foundation of Turkey Managing Director Guven Sak, and a number of foreign economic relations experts met Iranian President Hassan Rouhani’s chief of staff, Mohammad Nahavandian, Iran Chamber of Commerce, Industries, Mining and Agriculture Chairman Mohsen Jalalpour, and members of the ICCIMA board on March 2.
“We talked about the required steps to strengthen the private sector in Iran. We discussed what to do to boost ties bilaterally as well as with third parties together,” said Hisarcıklıoglu, adding that a strategic partnership can be established between TOBB and ICCIMA.
“We want to prepare a roadmap. In this vein, another delegation headed by TOBB board member, Memis Kutukcu, will visit Tehran this week to create a business plan,” he added.
No Hindrance
Hisarcıklıoglu also noted that Turkish Prime Minister Ahmet Davutoglu’s scheduled visit in March to Iran will be of great importance in terms of developing closer ties and opening doors for new deals.
“Just as political pressure did not damage our bilateral ties, disagreements over regional issues should not prevent us from working together. There is no problem between Turkey and Iran. We cannot accept any hindrance in our bilateral relations due to some third parties,” said Hisarcıklıoglu.
Noting that Iran has one of the richest energy resources of the world, he said, Hisarcıklıoglu said, “I believe economic relations between Turkey and Iran will gain a significant momentum with the lifting of sanctions. We have already had many investments in Iran’s food, furniture and auto parts industries, among others. New business opportunities will rise for Turkish construction players in Iran … I believe Turkish businesspeople will act quickly in raising their hands in Iran.”
