Iran’s Stock Exchange Bucks Global Market Downtrend

Iran’s Stock Exchange Bucks Global Market Downtrend

Iran’s stock exchange is a hit with investors, having reached a one-year high Tuesday just weeks after crippling economic sanctions were lifted as part of the nuclear deal the U.S. and five other countries signed with the former outlaw nation.

Although world stock markets have been struggling, foreign investors, particularly Europeans, have shown an eagerness to enter the untapped market. According to the Tehran Stock Exchange, daily trading has increased from $40 million to $133 million since the nuclear agreement went into effect in January. The Tehran TEDPIX index closed Tuesday at 73,725.

 Tins of caviar produced in Khajenafas fishery are sorted and categorized, ready for consumption. Khajenafas fishery is located about 20 kilometers away from Bandar Torkaman on the shores of the Caspian Sea in north Iran. (Photo by Kaveh Kazemi/Getty Images)

Chief Executive Officer of the Tehran Stock Exchange, Hassan Ghalibaf Asl, told Bloomberg that foreign investment in the stock exchange increased about $16.6 million dollars in the 10 days following the lifting of sanctions.

“It hasn’t been very long since implementation, but its impact in this short period of time has been very positive” Ghalibaf Asl said. “It’s also psychological. It has generated optimism about the future because the picture is clearer for investors.”

Analysts had mixed predictions for how quickly the long-isolated nation would begin to see benefits of the relaxation in sanctions. While some measures remain in place against Iran for its human rights abuses, support for terrorism and ballistic missile activity, sanctions for its nuclear activity were lifted as part of a deal reached with international powers last July. Under the agreement, Iran agreed to scale back its nuclear activities and undergo monitoring by the U.N. nuclear watchdog in exchange for the lifting of sanctions.

Critics of the nuclear agreement said the relaxation of sanctions would financially reward the regime despite Iran’s continued nefarious activity in the Middle East. Billions of dollars in assets were also unfrozen as the financial restrictions were lifted.

Nuclear-related sanctions can be reimposed if Iran is to be found cheating on its nuclear commitments, one cause for predictions that it would take awhile for the Islamic Republic to reap the benefits of a deal because companies would be cautious about investing there amidst the possibility the restrictions could return.

 This picture released by the Iranian state-run IRIB News Agency on Wednesday, Jan. 13, 2016, shows detention of American Navy sailors by the Iranian Revolutionary Guards in the Persian Gulf, Iran. Iranian state television is reporting that all 10 U.S. sailors detained by Iran after entering its territorial waters have been released. Iran's Revolutionary Guard said the sailors were released Wednesday after it was determined that their entry was not intentional. The nine men and one woman were being held at an Iranian base on Farsi Island in the Persian Gulf after being detained nearby on Tuesday.(Sepahnews via AP)

While it’s still off-limits for many sectors of the U.S. economy to do business with Tehran, European markets have opened eagerly. Iranian President Hassan Rouhani toured the continent last week, signing lucrative business deals in both France and Italy. The Iranian government controls 80 percent of the country’s economy, and Rouhani’s state visits were the first of an Iranian leader in 16 years.

He signed a deal worth 400 million euros with French car manufacturer Peugot Citroen and oil company Total said it had agreed to sell 150,000 to 200,000 barrels a day to Tehran. Rouhani also signed an agreement with European aircraft company Airbus, which will sell Iran 118 planes. The company’s CEO, Fabrice Bregier, said it “is proud to welcome Iran’s commercial aviation back into the international civil aviation community.”

Business in aviation is one sector of the U.S. economy that can reap benefits from the nuclear deal, with U.S. aircraft manufacturer Boeing also vying for its share of the new Iranian market.