Iran Nuclear Deal Seen Opening Last Big Frontier Market

2015/07/15
An economy bigger than Thailand’s and oil reserves rivaling those of Canada make Iran the most important market still closed to major equity investors, according to investment bank Renaissance Capital.
Officials from Iran and world powers sealed a historic accord on Tuesday to curb the Islamic Republic’s nuclear program in return for the lifting of sanctions, according to an official involved in the talks, who asked not to be identified. Removing the restrictions could open the Islamic Republic’s stock market to investors in early 2016, Renaissance’s Charles Robertson and Daniel Salter wrote in a report on Monday. Inflows could total $1 billion in the first year, they said.
“We are confident that Iran opening up will be one of the most interesting and positive developments for the emerging and frontier market asset class in many years,” Robertson and Salter wrote. “Iran is the largest and most important economy in our view that is still closed to institutional investors.”
The accord promises to end a 12-year standoff between Iran and world powers, which led to sanctions that crippled the nation’s economy. While the impact of an accord won’t be immediate, growth is set to accelerate from 2016, with gross domestic product expanding 7.9 percent, Emirates NBD PJSC, Dubai’s biggest bank, said in a report on Monday. Iranian stocks, which rose to the highest in three months this week, declined 0.1 percent at 11:27 a.m. in Tehran.
A final accord would have “significant implications for both the Iranian economy and global energy markets,” economists Khatija Haque and Jean Paul Pigat wrote. “The impact on domestic consumption, investment and trade in Iran would be enormous.”
AMIN INVESTMENT BANK