By Christopher de Bellaigue, Trusted Sources
The prospects for an Iranian economic revival and new opportunities for foreign investors hinge on a final agreement at the end of this month on the nuclear deal and United Nations verification – probably at the start of 2016 – of Iranian compliance, after which sanctions will begin to be lifted.
But even before being finalised, the nuclear deal is already proving economically beneficial since the prospect of the deal is facilitating the Iranian government’s efforts at fiscal adjustment essential for longer-term macroeconomic stability.
Political risk is well contained and will be further reduced by the most tangible dividends of the lifting of sanctions: Iran’s gaining access to $100-120bn in frozen assets (as soon as sanctions are lifted) and its readmission to the SWIFT mechanism of electronic money transfers. Read more
The least acknowledged economic race is gearing up for the starting line. Politics aside, the potential Iranian nuclear deal with the five permanent members of the United Nations Security Council plus Germany (P5+1) has led to multinational businesses focusing on the opportunities presented by a reconciliation with the Islamic Republic.
The magnetism of Iran as a destination for foreign investment is rooted in its large well educated workforce, richness in natural resources as well as, of course, its geopolitical importance.
In spite of sanctions, Iran has an established banking sector; infrastructural foundations in the transport, aviation and energy industries; a sophisticated consumer market that is conscious of international brands and products; a large number of port facilities and more than 20 free trade and special economic zones that are well placed to serve international companies. Read more
Tedpix index, 2 years. Source: Tehran Stock Exchange
Iranian investors’ concerns over the future of nuclear negotiations with the world powers, added to falling oil prices, have caused further falls in shares prices on the Tehran Stock Exchange.
The bourse’s main index, the Tedpix, closed at 66,902 on Wednesday – the last working day this week – about 11 per cent down from its 75,949 points on November 24, when investors expected the nuclear negotiators to yield results, particularly an easing of international sanctions over Tehran’s nuclear programme. Read more
By Faisal Ghori, author
The best performing stock market in the world in 2013 was up 130 per cent last year*. The country it serves has a population of nearly 80m, some 40 per cent of whom are under the age of 24. It has one of the world’s highest literacy rates and is also home to the world’s fourth largest proven crude oil reserves. Which market is this? The Tehran Stock Exchange (TSE), of course.
For frontier market investors, Iran remains the Holy Grail. Charles Robertson, Global Chief Economist at Renaissance Capital, believes that following the opening of the Saudi Arabian market, “Iran is the world’s last major market to open up” and could potentially be accessible in the next 6-18 months. Read more
Last week this blog looked at the investment case for Iraq under the headline: “A frontier too far?” So we were struck by a new report today on neighbouring Iran with the opening line: “Iran is beyond the final frontier for portfolio investors.”
One can quibble about which frontier is further but in truth investment in Iran is not so outlandish. The nuclear deal struck between Iran and several world powers in November prompted a renewed look at the investment case for Iran, as has been the case for other markets that have come in from the cold after international isolation, most recently Burma. But in fact, even in isolation, Iran’s capital markets have grown just fine. Read more
Many Iranians have expressed disappointment that their national currency, the rial, did not strengthen over the weekend in response to the historic phone call between Iran’s president Hassan Rouhani and Barack Obama.
The reason the currency market did not reflect the public mood, analysts believe, is because the central bank is determined to curb a currency crisis and shield the market against political news in order to encourage investment, domestic production and non-oil exports. Read more
Iranian shoppers are getting used to constantly rising prices, especially – and most worryingly – prices of basic commodities. Inflation over the past year has added to feelings of insecurity. Butter, for example, is increasingly scarce in Tehran and, where available, its price has doubled in the past few weeks, from 11,000 rials ($0.44) for 100 grammes to 22,000 rials. Read more
It’s difficult not to feel sympathy for the management of Tupras, Turkey’s sole oil refiner.
For the past two years the company has been walking the tightrope between the Turkish and US government positions on its crude imports from Iran, which at their peak of 9.25 million tonnes in 2011 accounted for more than half of the crude it processed. Read more
Dubai’s trade statistics for 2012 are in. And they show that, finally, western sanctions on Iran are crippling trade with the Islamic republic. Read more
For the past few months the Tehran Stock Exchange has looked like a green island surrounded by lava flows. State-run media have boasted of growth unprecedented in the bourse’s 46-year history, as the main index, the Tedpix, has leapt 45 per cent since September, sending the market capitalisation of traded companies to a run of record highs.
On that evidence, you would think the country’s economy was prospering – and not facing unprecedented sanctions and international pressure over its nuclear programme. Read more
After running into trouble with international sanctions in Iran, India’s top basmati rice exporter is focusing on Africa.
While Africa today consumes only small amounts of basmati, KRBL is seeing rapid growth – and it hopes to see much more in the coming years. As African consumers get richer, they are expected to develop a taste for more expensive imported foods. Read more
Exports of west African oil are on the rise, with Asian nations increasing supplies from the region. According to a recent report by Reuters, China, India, Indonesia, Taiwan and others in the region bought an average of 1.74m barrels of oil per day from west Africa for first nine months of 2012, up about 8 per cent from the same period a year ago.
The 2012 figures represent an overall record for the region, the report states, with exports to Asia rising more than 50 per cent over the last five years to meet growing demand. The reasons for the demand, however are not entirely clear cut. Is this a response to Iranian sanctions, as suggested? Read more
Six months of intense pressure from Washington to persuade Turkey to reduce its oil imports from Iran have apparently paid off.
Figures released on Tuesday by Turkey’s state statistics office TUIK indicate that of the 1.87m tonnes of crude Turkey imported in June only 684,000 tonnes – 37 per cent came from Iran. This is a significant drop on last year when Turkey sourced 51 per cent of its crude from Iran, and on March this year when imports from Iran peaked at 68 per cent of total imports. Read more
The last few days have seen a fresh wave of US sanctions against Iran, in an attempt to put the brakes on its nuclear programme. But cutting off Iran’s oil – its biggest export – isn’t easy.
Chart of the week takes a look at which emerging markets are affected the most. Read more
By Humay Guliyeva and Pan Kwan Yuk
That is the question beyondbrics found itself asking after it had a look at Turkey’s latest trade figures.
According to data released by the Turkish Statistical Institute (TurkStat), Turkey’s trade with Iran in May rose a whopping 513.2 per cent to hit $1.7bn. Of this, gold exports to its eastern neighbour accounted for the bulk of the increase. Nearly $1.4bn worth of gold was exported to Iran, accounting for 84 per cent of Turkey’s trade with the country.
So what’s going on? Read more
By Mika Purra of StraitsGlobal
Is it possible that the trajectory of Asia’s rise may not be as steep as prophesied?
This is a valid question, considering the recent news of both China’s and India’s economic slowdown. In fact, there are ample reasons to question the long-term economic course of Asia’s most populated countries. Read more
MTN, the South Africa-based telecoms group with operations in 21 countries in Africa and the Middle East, left investors struggling to understand its prospects on Wednesday. Its 2011 results were decent enough and an ambitious capex programme promises future growth. But there are things to worry about, including Iran and Syria, which account for nearly 15 per cent of revenues.
MTN’s shares (MTN:JNB) rose more than 2 per cent during the day but fell back to close down 0.81 per cent. Read more
Here’s one for all those Latinos feeling starved of an Iranian angle on regional affairs: Iran is to launch a Spanish-language television network, called Hispan TV, aimed at “Spaniards and Latin nations”.
That may leave some Brazilians feeling a bit miffed. Or not. But then relations between Brazil and Iran, so close so briefly under Brazil’s former charismatic president, Luiz Inácio Lula da Silva, have gone a bit colder under the more businesslike Dilma Rousseff. Read more
By Tae Jin Park of mergermarket
Foreign acquisitions by Iranian companies are the rarest of M&A beasts. But Iranian white-goods distributor Entekhab Industrial is set to buy South Korea’s troubled Daewoo Electronics for $520m. The move is likely to raise eyebrows in the US, where Iran’s foreign trade is viewed with suspicion.
However, for Daewoo’s creditors, Entekhab’s arrival offers a welcome exit – eleven years, three failed purchase attempts and 1,500 employee redundancies after the Daewoo conglomerate collapsed under the weight of its debts. According to mergermarket data, the deal is the first since at least 2004 where a Middle Eastern company has bought a Korean counterpart. Read more
Toyota confirmed on Wednesday that it had suspended all automobile shipments to the country in June after scaling them back since 2008. The Japanese carmaker, whose Land Cruiser 4×4 is popular among those few Iranians who can afford to buy a heavily taxed foreign vehicle, said its decision reflected “the international situation including sanctions by the US and the UN”.
Toyota is not the only Asian manufacturer to be spooked by harsher scrutiny of trade with the atomically ambitious state. Some South Korean steel manufacturers and motor groups, including Hyundai, have also reportedly halted exports. Read more