Iran Free Trade Zones Plan International Bourse

Morteza Bank told the international Exhibition of Exchange, Banking and Privatization (Kish Invex 2018) on Monday that creating an international bourse is important to enhance the scale and scope of the business climate in the FTZs. 

"Attracting foreign investment, facilitating the presence of domestic businesses on the international stage, forging interaction between foreign investors and their domestic peers, proper distribution of capital and directing non-rial assets toward businesses active on the international level are among the goals of the international bourse," Bank was quoted as saying by the Securities and Exchange News Agency. 

FTZs were first authorized in 1993 in Kish Island, Qeshm Island and Chabahar Port. Later, Aras, Arvand, Maku and Anzali were added to the list, according to Financial Tribune.

Bank had earlier said that 1,400 industrial units were active in the seven zones.  

As the second round of US sanctions next month is slated to target oil exports, Iran is ramping up efforts to reduce the fallout. US President Donald Trump pulled out of a multilateral Iran nuclear agreement in May and reimposed sanctions eased after the deal was signed in 2015. 

Hossein Salimi, deputy head of the Money and Capital Markets Committee at Tehran Chamber of Commerce said the decision to create an international bourse in the FTZs had been made almost a year ago.

 "It is true that our country has the first or second ranking when it comes to oil and gas reserves and a young and active population. But under current circumstances we should not count on these paradigms because foreign investors would be held back by the US approach," Salimi told the Financial Tribune. 

He said, however, that Iran's stock market is alluring enough for investors. 

"The stock market in the past 15-20 days has gone from a daily trading of 2-3 trillion rials to 20 trillion-30 trillion rials," he added. 

Soon after the nuclear deal, there was demand for investment in Iran's stock market close to $20 billion, he said. "Currently and despite the sanctions the number of foreign investors in Iran's stock market has not come down to zero, and seven foreign entities are still active." 

He said among the foreign new comers into the stock market were a handful of Chinese firms.   

Iran has announced plans for spot oil trading on its energy exchange with the National Iranian Oil Company saying it was offering one million barrels of light crude oil on the energy bourse. According to a NIOC notice, the first session of trading will start on October 28, at 02:00 pm local time. 

New Instruments 

The Head of Securities and Exchange Organization Shapour Mohammadi told the Kish expo that  the regulating body intends to introduce futures and warrant instruments - contracts giving the option to buy underlying shares at a later date – before the yearend on March 20. 

Mohammdi added that the SEO, in collaboration with the Central Insurance company of Iran plans to issue reinsurance finance instruments and as well as catastrophe bonds. 

He referred to the diversity of instruments in the domestic capital markets and said 590 companies are listed on Tehran Stock Exchange and the junior marker Iran Fara Bourse. "This is an acceptable number compared to other countries." 

He also referred to the commodities and goods trade on the Iran Mercantile Exchange, saying that the  diverse trading has been enriched further in recent years especially in the agro sector with the addition of wheat, corn and saffron. 

"The value of Iran's stock market has seen a significant increase in recent years, reaching 8 quadrillion rials ($58.18 billion) which accounts for 40% of the GDP.”