Font Size

- Aa +

Thu 25 Feb 2016 01:50 PM

Font Size

- Aa +

Tehran bourse plans new indices to boost trust among foreign investors

Iran is ramping up efforts to attract foreign investment now restrictive sanctions have been lifted

Tehran bourse plans new indices to boost trust among foreign investors
(Getty Images)

The Tehran Stock Exchange is in the “late stages” of compiling a new index ranking companies according to their transparency and governance structures, its CEO said on Wednesday.

It is a rare move for a stock exchange and one intended to boost confidence among foreign investors in Iranian capital markets.

Iran is ramping up efforts to attract foreign investment now restrictive sanctions have been lifted.

Speaking to Arabian Business during a conference in Muscat this week, Tehran Stock Exchange CEO Hassan Ghalibaf Asl said the Iranian capital market was “one of the most liquid” in the region but mainly comprises local investors at present. “It would benefit from increased contributions from foreign investors,” he said.

Bahzad Golkar, CEO of Iran’s Sina Financial and Investment Holding, one of the biggest conglomerates in the country, reiterated Ghalibaf Asl’s calls. “The Iran capital market needs fresh blood,” he said.

However, even if sanctions have not applied to them, foreign investors have historically been shy of investing in Iran and Ghalibaf Asl said greater efforts were needed to secure their trust.

“Transparency is actually very strong in Iranian capital markets,” he said. “But based on [the notion that] it is a company’s own responsibility to ensure this, [the Tehran Stock Exchange] has started a new project – not yet finalised but in the late stages – to rate listed companies according to the corporate governance and transparency structures they have in place.

“We will then publish a new index based on this ranking. We think this will be important in increasing foreign investment in Iran.”

The exchange also plans to create a market for foreign exchange-dominated securities – not shares – to further incentivise foreign investment, Ghalibaf Asl said.