Investing in Iran

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Following the July 14 nuclear agreement between Tehran and the world powers, Iran is expected to come out of a three decades-long economic isolation. Iran which has the fourth largest oil reserves and the largest natural gas reserves, has long been a “dreamland” for many businesses.
Iran is certainly a unique market in the Middle East. It is populous, rich in natural resources and apt to technological progress and international developments. The country's natural resources create a significant wealth. Some of main features of the country are highlighted below:
Strategic Location: A unique geographical location at the heart of a cross-road connecting the Middle East, Asia and Europe, empowered by many inter- and trans-regional trade, customs, tax and investment arrangements.
Market Potentials and Proximity: Vast domestic market with a population of 65 million growing steadily as well as quick access to neighboring markets with approximately 300 million inhabitants.
Labor Privileges: Large pool of trained and efficient manpower at very competitive costs in a diversified economy with an extensive industrial base and service sector.
Developed Infrastructure: Territory developed networking in the area of telecommunication, roads and railways across the country.
Low Utility and Production Cost: Diversified range of energy, telecommunication, transportation, as well as public utilities.
Abundant Natural Resources: Varied and plentiful reserves of natural resources ranging from oil and gas to metallic and non-metallic species reflecting the country’s accessibility to readily available raw materials.
Climatic Characteristics: A four-season climatic endowment as a privilege to agricultural activities throughout the country and throughout all seasons.
Fiscal Incentives: Reduced tax rates from 65% to a flat fixed 25% rate of tax income despite various tax holidays.
Political Stability: Representative system of government based on friendly relationship with other nations.
New Investment Legislation: Enactment of new Foreign Investment Promotion and Protection Act (FIPPA) to substitute the former Law Concerning Attraction and Protection of Foreign Investments in Iran (LAPFI) providing full security and legal protection to foreign investments based on transparency and international standards.

TEHRAN STOCK EXCHANGE

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The 48-year-old Tehran Stock Exchange (TSE), Iran’s primary exchange, features over 300 listed companies classified into nearly 40 industries. The TSE is considered the most diversified market in the region. Since 1979, the TSE — which trades a range of shares, funds and financial instruments, including Sukuk and Islamic funds — has sustained periods of growth in trading and market capitalization.
The TSE was viewed as a “phenomenon” in 2013. From 2009 to September 2013, the TSE overall Index (TEDPIX) witnessed growth of more than 500%. This growth was achieved despite the lagging Iranian economy. However, the TSE Overall Index declined 21 percent in 2014. Experts had anticipated such a correction following the sharp increase in prior years, which was largely attributable to inflation hitting the price of listed equities.
With an estimated gross domestic product of $406.3 billion, according to the World Bank, Iran has the potential to rank among the top 20 economies in the world. The country boasts a large middle class and has made progress in dismantling subsidies to get its macroeconomic incentives in order. The country also has a strong, but often overlooked, industrial base. Iran is the 3rd producer of cement and 14th producer of steel in the world. It is also the largest producer of cars in the Middle East.
Back in 2007, when Goldman Sachs named Iran among the list of “Next 11” most promising emerging markets, many investors wished for a day when investment in Iran would be possible. That day is finally here. In its recent report, World Bank has also forecasted a jump to 5% GDP growth for Iran in 2016 if the sanctions are removed.

How to invest

in Iran stock market

Foreign investors can invest in Tehran Stock Exchange (TSE), directly or indirectly, throughout mutual funds. To invest in Tehran Stock Exchange, you need to obtain a license from Security Exchange Organization (SEO) and then get a “trading code” from SEO. Boursiran Securities will take care of this for you. We just need your passport and signature. A trading code is a unique trading ID that is required for trading and owning shares or bonds in TSE and IFB. However, for investing in mutual funds, the trading code is not required.

Trading hours

at Tehran Stock Exchange

For equity spot market:
Preopening period: 8:30 to 9:00,
Trading period: 9:00 to 12:30

For equity futures market:
Trading 9:00 to 12:30

These hours are effective Saturdays to Wednesdays, except public holidays

A vast range of listed securities

at Tehran Stock Exchange

The following instruments are available on TSE:

  • Stocks (common and subscription rights)
  • Bonds (Participants Certificate and Sukuk)
  • Derivatives (Single stock future and Stock options)*
  • Housing Mortgage Rights (HMR)
  • Exchange Traded Funds (ETF)

Daily Price Fluctuation Limit

at Tehran Stock Exchange

In order to maintain a stable stock market, SEO has set a fluctuation limit for each trading day. The daily price fluctuation limit for stocks is set at 5% of the closing price of the preceding business day. For subscription rights the limit is set at 10%.

What does the phrase 'base volume' refer to?

at Tehran Stock Exchange

Base Volume means the number of securities of the same type which is to be traded daily so that the total percentage of the spread during the day can serve as a base to determine the price for the following day. This was ratified by the regulatory body, SEO, to control the unreasonable rise in equity prices. The base volume differs for various companies in diverse industries. However, the O.T.C. Market is not restricted to Base Volume.

What is CSDI?

at Tehran Stock Exchange

Central Securities Depository of Iran (CSDI) is a public company, which handles the clearing and settlement operations, and also acts as the Central Depository for all securities in Iran. The main shareholders of CSDI are TSE, banks and member firms.

Are capital gains and dividends exempt from taxes?

at Tehran Stock Exchange

Yes, capital gains and dividends are tax free for both Iranians and foreign investors.

Which method is being used for calculating TSE's indexes?

at Tehran Stock Exchange

Various indices are calculated in TSE such as price index (TEPIX) and Dividend index (TEDIX), Price and Dividend index (TEDPIX), index of 30 blue-chips, and free float index. In addition, indexes of 37 industries are also calculated. All of them are capitalization weighted indexes.

How much should you pay commission in order to trade in Tehran Stock Exchange?

at Tehran Stock Exchange

Following Commissions should be paid for transactions in Tehran Stock Exchange:

  • Brokers commission: Both buyer and seller should pay 0.4 percent of transaction value.
  • Stock Exchange Companys commission: 0.08 percent of transaction value up to 200 million Rials which 60 percent should be paid by buyer and 40 percent should be paid by seller.
  • Commission of Stock Exchange Organizations supervisions right: 0.08 percent of transaction value up to 200 million Rials which 60 percent should be paid by buyer and 40 percent should be paid by seller.
  • Commission of Central Securities Depository: 0.025 percent of transaction value up to 200 million Rials which 60 percent should be paid by buyer and 40 percent should be paid by seller.
  • Commission of Tehran Securities Exchange Technology Company: 0.03 percent of transaction value up to 200 million Rials which 60 percent should be paid by buyer and 40 percent should be paid by seller.
  • Transaction Tax: 0.5 percent of transaction value should be paid by seller.
Total Commission paid by buyer = 0.486 percent of transactions value
Total Commission paid by seller = 0.529 percent of transactions value