Iran talks excite frontier fund managers

roundtable 410Frontier fund managers are excited at the prospect of investing in Iranian equities for the first time in years should talks in Vienna lead to sanctions relief.

Negotiators from Iran and six world powers are meeting in the Austrian capital to discuss an agreement to limit Iran's nuclear programme in return for ending sanctions.

The sanctions include a ban on Iranian banks using the international settlement system Swift. If this is lifted, it could pave the way for fund managers to buy stocks on the Tehran stock exchange.

"From the viewpoint of a frontier emerging markets equity investor, this potential breakthrough could provide one of the most interesting investment opportunities we have seen for a very long time," says Dominic Bokor-Ingram, head of frontier markets at Charlemagne Capital.

"The economic potential of a lifting of sanctions would be huge. The twin positives of an appreciating currency and stock market we believe would provide substantial returns to early stage investors."

First opened in 1967, the Tehran Stock Exchange lists about 500 companies with a combined market capitalisation of nearly $160 billion at the official exchange rate.

Stock prices on the exchange are on average six times earnings, a lower ratio than many other emerging markets.

"Whilst current banking sanctions make it very difficult to get money into the stock market, we aim to be ready to provide clients with products to access the markets when and if these sanctions are lifted," says Bokor-Ingram.

©2014 funds europe

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