An economy bigger than Thailand’s and oil reserves rivaling those of Canada make Iran the most important market still closed to major equity investors, according to investment bank Renaissance Capital.
Lifting sanctions could open the Islamic Republic’s stock market to investors in early 2016, Renaissance’s Charles Robertson and Daniel Salter wrote in a report on Monday. Inflows could total $1 billion in the first year, they said.
Diplomats from Iran and six world powers have been holding talks for more than two weeks in Vienna to try to clinch an accord that would curb the country’s nuclear program in return for easing sanctions. Negotiators cleared one of their last remaining roadblocks on Sunday when they agreed on the phased lifting of a United Nations arms embargo, according to two diplomats.
“We are confident that Iran opening up will be one of the most interesting and positive developments for the emerging and frontier market asset class in many years,” Robertson and Salter wrote. “Iran is the largest and most important economy in our view that is still closed to institutional investors.”
While the impact of an accord on Iran’s economy won’t be immediate, growth is set to accelerate from 2016, with gross domestic product expanding 7.9 percent, Emirates NBD PSCJ, Dubai’s biggest bank, said in a report on Monday.
A final accord would have “significant implications for both the Iranian economy and global energy markets,” economists Khatija Haque and Jean Paul Pigat wrote. “The impact on domestic consumption, investment and trade in Iran would be enormous.”