History
The Tehran Stock Exchange (TSE) was established in 1967 as one of the first stock exchanges in the MENA region. It grew from 5 listed companies in 1967 to 105 listed companies by the time of the Islamic Revolution in 1979. It closed in 1980 due to the Revolution and the Iran-Iraq war. Following this, it reopened in 1989 with 56 listed companies and the introduction of the Tehran Stock Exchange Price Index. Since then, the number of listed companies has experienced a dramatic increase. There were approximately 330 companies listed on the TSE as of the beginning of 2009.
Performance
The performance of the Tehran Stock Exchange from 2000-08 has averaged approximately 38% per annum in Rial terms. In 2003, the TSE was the world's best performing stock exchange, with a 132% return. Also, in 2008, the TSE was the only exchange member of the World Federation of Exchanges with positive returns.
The total market value stood at $50 billion at the end of 2008. As of early 2009, the weighted average P/E ratio of the TSE was approximately 4, which was below the average of emerging markets. In 2004, the TSE P/E ratio peaked at just below 11, before falling back again to its current level. Given the current P/E ratios and the exceptionally high dividend yields, the equity market appears to be significantly undervalued.
One of the unique characteristics of the TSE is its lack of correlation with the major capital markets around the world. Reasons for the lack of correlation include the lack of significant foreign investment, limited dependency of most listed companies on global trade, and lack of multiple exchange listings.
Regulation
The Tehran Stock Exchange is regulated by the Securities and Exchange Organization (SEO). The TSE has a fully automated, order-driven trading system. The TSE has unique and somewhat complex regulations, which can sometimes make the investment process more difficult, but it can also create investment opportunities for the informed investor.
In 2006, the TSE introduced more stringent reporting and disclosure requirements for listed companies and enforcement measures for non-compliance. There are several auditing firms approved by the exchange regulator and the Iran Audit Organization, including representative offices of KPMG and PWC that are active in Iran. The exchange publishes all financial statements and company news and releases on its website.
Outlook
Privatisation policies that were projected in Iran’s existing development plan are a positive indicator for future growth and dynamism in the Tehran Exchange. Regulations are complex, but improving each year. The TSE is a full member of the World Federation of Exchanges and a founding member of the Federation of Euro-Asia Stock Exchanges (FEAS). The combination of these factors and the strong economic outlook, make the Iranian capital market a unique investment opportunity.
The Tehran Stock Exchange (TSE) was established in 1967 as one of the first stock exchanges in the MENA region. It grew from 5 listed companies in 1967 to 105 listed companies by the time of the Islamic Revolution in 1979. It closed in 1980 due to the Revolution and the Iran-Iraq war. Following this, it reopened in 1989 with 56 listed companies and the introduction of the Tehran Stock Exchange Price Index. Since then, the number of listed companies has experienced a dramatic increase. There were approximately 330 companies listed on the TSE as of the beginning of 2009.
Performance
The performance of the Tehran Stock Exchange from 2000-08 has averaged approximately 38% per annum in Rial terms. In 2003, the TSE was the world's best performing stock exchange, with a 132% return. Also, in 2008, the TSE was the only exchange member of the World Federation of Exchanges with positive returns.
The total market value stood at $50 billion at the end of 2008. As of early 2009, the weighted average P/E ratio of the TSE was approximately 4, which was below the average of emerging markets. In 2004, the TSE P/E ratio peaked at just below 11, before falling back again to its current level. Given the current P/E ratios and the exceptionally high dividend yields, the equity market appears to be significantly undervalued.
One of the unique characteristics of the TSE is its lack of correlation with the major capital markets around the world. Reasons for the lack of correlation include the lack of significant foreign investment, limited dependency of most listed companies on global trade, and lack of multiple exchange listings.
Regulation
The Tehran Stock Exchange is regulated by the Securities and Exchange Organization (SEO). The TSE has a fully automated, order-driven trading system. The TSE has unique and somewhat complex regulations, which can sometimes make the investment process more difficult, but it can also create investment opportunities for the informed investor.
In 2006, the TSE introduced more stringent reporting and disclosure requirements for listed companies and enforcement measures for non-compliance. There are several auditing firms approved by the exchange regulator and the Iran Audit Organization, including representative offices of KPMG and PWC that are active in Iran. The exchange publishes all financial statements and company news and releases on its website.
Outlook
Privatisation policies that were projected in Iran’s existing development plan are a positive indicator for future growth and dynamism in the Tehran Exchange. Regulations are complex, but improving each year. The TSE is a full member of the World Federation of Exchanges and a founding member of the Federation of Euro-Asia Stock Exchanges (FEAS). The combination of these factors and the strong economic outlook, make the Iranian capital market a unique investment opportunity.
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