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Capital Markets

Middle East: Iran’s markets come in from the cold

The country’s financial system is still not easy to access; money has trickled rather than flooded into its stock exchange since January’s deal with the US to lift sanctions. Nevertheless, as the country emerges from years of isolation, important changes are taking place that could herald a new era for Iran’s capital markets.

By Dominic Dudley

Iran cold Azadi square-R-600
An Iranian woman walks through the snow during a cold winter night at Azadi (freedom) square west of Tehran February 7, 2005. Pictures of the month February 2005 REUTERS/Morteza Nikoubazl MN - RTRMML0
© Morteza Nikoubazl / Reuters/REUTERS

Attracting investors to the Iranian capital markets has long been a challenge. International investors have been scared off by sanctions and the reputational risk of doing business in Iran; even their domestic counterparts have found it more profitable to keep their money in banks than in the more volatile stock market. Yet the outlook is changing for both groups. Could the Tehran Stock Exchange be on the cusp of a breakthrough?

The appeal for many investors of the TSE and the junior Farabourse market is largely tied to the difference between bank deposit rates and the returns they can expect from investments in listed companies.

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