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Iranian investors: Watching the White House's next move

Key Points
  • Iran's stock market picks up ground ahead of key White House announcement
  • Companies show more confidence than individuals
  • Iranian firm lists first of its kind investment vehicle in London

On the eve of a crucial decision by President Trump regarding the Iran nuclear agreement, the Iranian stock market is showing signs of strength.

A trader speaks with a stock market official beneath the electronic board at the Tehran Stock Exchange, Sept. 15, 2010.
Caren Firouz | Reuters

Despite dropping one point four percent in a week, the Tehran Stock Exchange is up two percent in a month, four and a half percent in three months and seven point three percent in six months.

"The threat of decertification does have a huge psychological impact," said Ramin Rabii, CEO of Turquoise Partners. As head of Iran's leading investment firm catering to foreign investors Rabii admits "risk is still a major concern."

Over the last five months, volume from foreign investors rose 67 percent – but it's unclear exactly where that volume came from. The Islamic Republic has been courting business and investors from Europe and Asia since the landmark 2015 nuclear agreement went into effect with mixed results.

Corporate Investment vs. Individual Investment

Iranian investors are optimistic about corporate investment coming into the country. There has been a noticeable jump in business from the United Kingdom, Europe, Turkey, Russia, South Korea and China. Rabii's Turquoise Partners has been advising clients on how to navigate the complex Iranian market. Most of that interest has been in Iran's consumer, infrastructure and energy sectors.

However when it comes to individual investment in stocks listed on the Tehran Stock Exchange interest remains tepid. Rabii says "there's been no game changer."

Customers use computers at an Internet cafe in Tehran, Iran.
Raheb Homavandi | Reuters

So instead of waiting for investors to come to Tehran, Rabii and his firm are working to export Iranian companies. The firm is behind a vehicle called Indigo which listed on London's NEX exchange earlier this year. Indigo invests in three Iranian companies giving investors abroad the chance to invest in Iran's burgeoning consumer sector.

While Turquoise may add companies later, for now Indigo consists of three firms.  Sheypoor is an Iranian online search and shopping website. Carvanro, a ride sharing service and Iranian Fast Moving Consumer Goods, the online section of one of Iran's biggest convenience store chains.

Rabii is interested in expanding Indigo's reach, calling this a test but lamenting the difficulties of getting foreign exchanges to list Iranian companies.

A general view shows a unit of South Pars Gas field in Asalouyeh Seaport, north of Persian Gulf, Iran.
Raheb Homavandi | Reuters

Despite the desire of many Iranians to advance the economy, the Iranian stock market is still closely tied to petrochemicals, mining and metals. The Tehran Stock Exchange owes a large part of its solid performance this year to the rising price of global commodities. In addition the currency market has also been favorable to Iran, making Iranian goods less expensive and investment more affordable for Asian and European firms.