Tehran Stock Exchange, Borsa Istanbul ink deal

A memorandum of understanding has been inked between the Tehran Stock Exchange and the Borsa Istanbul stock exchange in order to facilitate the opening of foreign markets. Tehran Stock Exchange CEO Hassan Ghalibaf Asl said some Iranian firms operating in the copper, petrochemicals and automotive sectors want to go public on the Borsa Istanbul. The agreement, which was signed after five months of negotiations, includes the trading of mutual products on both stock markets. The main objective of the agreement is to open both stock markets' derivative products, including investment funds and interest-free debt instruments, for transactions on each other.

Borsa Istanbul CEO Tuncay Dinç said the stock market offered an official invitation to the Tehran Stock Exchange for cooperation, and this step, which was taken before sanctions are removed on Iran, will set a good model.

Explaining the particulars of the memorandum of understanding, Dinç said the agreement aims to boost cooperation in staff exchange and know-how. "As the Borsa Istanbul, we wanted to include Iran in our cooperation with neighboring countries," he said, adding that the agreement, which does not include any obligations for now, is a good beginning for improving relations. Underlining that companies might be traded on both stock markets at later stages, Dinç said the Iranian stock market, which outperforms the Borsa Istanbul in terms of volume of investment funds, non-interest debt instruments and sukuk, will support the Borsa Istanbul in these areas. Dinç said that the Borsa Istanbul will take on a profit-oriented approach and support the Tehran Stock Exchange in terms of the derivatives market.

Asl said the market value of 320 publicly traded companies listed on the Tehran Stock Exchange is $320 billion and the stock market's annual transaction volume is $25 billion. Referring to the fact that the foreign share in the stock market is not more than 1 percent, Asl said that stockbrokers and banks each have a 40 percent share in the stock market and the remaining 20 percent belongs to individuals. "Iranian and Turkish companies are willing to be traded on both stock markets," he said. In terms of market value, petrochemical companies, banks, the mining sector and information technology firms have a 25 percent, 10 percent, 10 percent and 8 percent share, respectively, on the Tehran Stock Exchange. There are also four Iranian automotive companies and 30 cement factories traded on the market. Companies operating in 37 different sectors have transactions on the stock market. "Due to this diversity, foreign investors take great interest in the Iranian stock market," Asl said.

According to Asl, Iran still cannot transfer money despite signing a nuclear agreement with world powers. The country has, however, attracted 170 visits from European countries, particularly from the U.K. France and Germany, after signing an agreement that includes the lifting of sanctions.

Asl said the stock market was invited to a roadshow in London, adding: "Foreign investors take great interest in our country and stock market. We look forward to meeting foreign investors who are currently engaged in talks with Tehran to invest in our country."

Asl said Iran expects that sanctions on the country will be removed after two months and that this would attract more foreigners to the Tehran Stock Exchange. The International Monetary Fund (IMF) estimates that the Iranian economy will not grow this year, but it can grow by some 6 percent with the removal of sanctions in 2016, according to Asl.