Why Tehran Stock Exchange and Borsa Istanbul can't strike deal?
Baku, Azerbaijan, March 2
By Farhad Daneshvar - Trend:
Iranian capital market's lack of transparent regulations and rules, the improper financial statements of companies, as well as volatile exchange rates in the Islamic Republic appear to pose obstacles for materializing a recent agreement between the Tehran Stock Exchange (TSE) and Borsa Istanbul, an Iranian financial analyst believes.
"The TSE and Borsa Istanbul have signed a memorandum of understanding (MoU) on dual listing of Iranian and Turkish companies in both markets," Alireza Kadivar, told Trend March 2.
A delegation from the Turkish capital market visited Iran Feb. 29 to explore the opportunities for joint cooperation in Iran's capital market. The delegation included the representatives of the Capital Markets Board of Turkey, Borsa Istanbul and other Turkish capital market practitioners.
Saying that the MoU cannot be implemented in the near future, Kadivar added that preparation is required to materialize the agreement.
Explaining that Iran lacks transparent regulations and rules to list foreign companies in the stock exchange, the analyst added that Iranian companies have also failed to meet the international standards of financial statements.
"The international investors need financial statements to analyze the market, but Iranian companies cannot provide that," Kadivar mentioned. "Volatile exchange rates are another obstacle against implementing the agreement."
Saying the currency market has slightly improved over the past couple of years, he added that a stable currency market is an initial requirement of foreign investment in the country.
While the removal of international sanctions against Iran offers a new outlook for a large emerging untapped market, the risk of exchange rate fluctuations remains as a major barrier for drawing the attention of international investors.
Iranian President Hassan Rouhani's government has been developing plans for luring $30 billion worth of foreign investment in the post-sanctions era to renew the country's ageing industry and ailing economy.