The Iranian stock market is an enigma to most Western investors. Relatively few people are familiar with the fundamentals of this dynamic country. Yet the Iranian economy is the second-largest in the Middle East after Saudi Arabia – and far more diversified. It is also the region’s second most-populous country after Egypt.
Did you know that Iran’s automotive industry generates over 10% of its GDP? Or that the country has long fostered a culture that rewards – and expects – high dividend payouts from listed companies. Of course this is rational when one considers the country’s volatile rate of inflation. But, when coupled with its market’s almost absurdly low price/earnings ratios – lower than any country except Russia – this market’s fundamentals are certainly raising eyebrows amongst those ‘in the know’.
The decades-long standoff between Iran and the West appears to be drawing to a close now, after an agreement was reached between Iran and the so-called ‘P5 + 1 group’ last month in Vienna. Speculation is now rife with potential opportunities to invest in the Iranian capital markets – we know of at least ten hedge fund managers who have travelled to Tehran in the past several weeks, and we are sure that many more are crowding business-class cabins to and from the Iranian capital.
Recently Frontera sat down with Eddie Kerman of Turquoise Partners, an Iran-based financial services group, to find their answers to these questions. Turquoise has been active in the Iranian economy for over a decade, and claims to manage more than 90% of all foreign portfolio investments on the Tehran Stock Exchange.
Tune into the below podcast for your roadmap to Iranian equities investing.
This is the first in a series of podcasts that Frontera will be conducting with some of the leading Iranian-focused asset managers, brokers, and investment funds. Count on Frontera to provide your masterclass on one of the largest economies in the Middle East today
1:18 – What does Turquoise Partners do?
4:28 – What is the process to becoming an active investor in the Iranian capital markets? Is a local presence required?
8:52 – Equities forecast for the next 3-5 years? As the market opens up and foreign capital comes in, what is the outlook for P/E ratios?
11:15 What are the biggest impediments to investing in Iran right now?
13:35 Is it true that there is a culture of very high dividend payouts in Iran? Which particular sectors typically pay an outsized dividend relative to others?
15:18 What has been the impact of 2013 currency devaluation?
17:35 What else do interested foreign investors need to consider while researching a potential entry into the market?