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Iran's Potential Investment Implications

April 7, 2015

It's early days and the agreement between Iran and the international community might yet falter. But if sanctions are lifted, the investment implications range well beyond just energy. While some investors are able to invest directly in Iran's stock market, many of the initial opportunities lie with international firms that have exposure to the potential changes in Iran. Depending on how events unfold, MRP will look for concrete investment recommendations. As detailed in the Daily Intelligence Briefing, here are a few of the potential winners and losers.

Potential winners

Energy infrastructure: Iran's oil industry needs US$ 500 billion in new investment
European energy companies: The EU's sanctions regime is less layered than the US, giving an early edge to European oil and gas firms looking to re-enter Iran
Banks: Household debt is low and credit cards are rare
US pharmaceuticals: Some 50 medical companies received waivers from the US for humanitarian goods and are poised to expand current operations
US/EU consumer goods: Demand so far has been met by lower quality imports from India and China, who now stand to lose

Potential losers

Other cash-strapped oil-producing countries like Venezuela and Nigeria: They face renewed competition from Iran's oil exports
Countries like India and China that did not adopt their own sanctions on Iran: They now face competition in Iran from US and EU firms
Russia: Besides oil, Iran has 20% of the world's natural gas reserves ... another possible pipeline to Europe ... another potential competitor for Russia

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Last updated April 7, 2015

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Warren Hatch, PhD, CFA
Portfolio Management and Global Investment Strategy
McAlinden Research Partners

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