Foreign firms prepare to dive into Iran’s lucrative private equity market
Foreign businesses are scouring Iran in search of investment opportunities when sanctions are finally lifted based on the deal reached on the country's nuclear program.
TEHRAN — Hotels in the Iranian capital are all booked, hosting an array of bargain-hunting foreign investors in one of the world's biggest untapped markets. As Iran and six world powers have finally clinched a deal on Iran's nuclear program, the road is paved for positive economic momentum. With the most crucial systemic risk to investment no longer squeezing the insulated Iranian stock market, many institutional investors are gauging sectors in which to pump fresh capital.
At present, given the hitherto wobbly Iranian economy, most stocks have notched rock-bottom values. Listed companies are grappling with the country’s recession and credit crunch, and trade volume and value have recently reached a dramatic low. The Tehran Stock Exchange (TSE) benchmark in particular has had a bumpy ride since the beginning of the current Iranian year, which began March 21. In recent months, investors shored up their portfolios in search of gains on speculation about a nuclear deal, with TEDPIX, the main index, soaring around 6% during the month ending July 22.
After the deal was clinched July 14, however, irregular behavior, herd mentality and alleged manipulation weighed on the TSE, wiping out 3.5% of gains and spurring concern among retail and institutional investors. Making matters worse, at recent annual general meetings, Iranian firms have fallen short of announcing anticipated dividends. This has slashed already unsettled investor expectations about the performance of listed firms.
So, why is the Iranian equity market still so attractive for foreign investors?
