News & Reports News Year 2010 October , 2010 Foreigners buy Iran shares at three times pace as rules change

Foreigners buy Iran shares at three times pace as rules change

Foreigners bought three times as many shares in Iran’s publicly traded companies in the past six months as they did a year earlier after the authorities changed the rules to attract international investors.

Foreigners invested $250 million in Iranian stocks since March 21, the beginning of the Iranian year, after investing $140 million in all of the preceding 12 months, Hassan Qalibaf-Asl, the Tehran Stock Exchange’s president said in an interview in Paris after attending the annual meeting of the World Federation of Exchanges.

TSE’s benchmark index, the Tepix, has surged 63 percent year-to-date, making it the third-fastest growing primary index in the world, according to data compiled by Bloomberg.

In April 2010, Iran introduced regulations to attract foreign investors. The rule changes enabled investors to repatriate their capital without any time restrictions.

Under the previous rules, foreigners had to leave the principal of their investments in shares for three years.

“Now there is no such limit,” Qalibaf-Asl said. “A foreign investor was not allowed to buy more than 10 percent of a company’s shares. This has now increased to 20 percent.”

According to Ali Sanginian, TSE vice president for research and business development, the new rules force the authorities to exchange foreigners’ shareholdings in Iranian rials whenever they want.

“The central bank is, by law, obliged to exchange your rials whenever you need to repatriate your money,” he said.

Foreign investors’ money is guaranteed and insured against nationalization and revolutions, Sanginian said without giving any explanation of how the guarantee works.

The TSE lists 338 companies with a total value of 860 trillion Iranian rials ($82.4 billion).

The TSE will offer foreign-exchange futures once the central bank has approved the contracts, Qalibaf-Asl said. The exchange introduced futures contracts for some shares in July.