Speaking at MEED's Capital Markets conference in Dubai on 29 September, TSE secretary-general Hossein Abdoh Tabrizi said he hoped the market could also establish co-operation with markets in Saudi Arabia and Kuwait. Two recent moves to open TSE to foreign investors have fallen through as legislation is still being prepared to clarify the foreign investment terms.

Last year Cairo-based EFG-Hermes attempted to set up a Tehran-based investment fund with the local Atieh Bahar Consultants but the project was scrapped due to difficulties in raising interest. And EFG-Hermes this year set up the First Iran Investment Fund based in Bahrain and registered in Iran's Kish Island Free Zone. However, after a promising marketing campaign the fund fell through amid TSE's attempts to dampen down a dangerously bullish market.

TSE's plans to introduce foreign investment in stages over the next five years are contingent on growth in both market size and the level of trading free float. That in turn will be achieved by releasing stock in publicly-held companies. Tabrizi said that at least two banks and two insurance companies will be listed in the next 14 months as well as stock in the steel industry. He aims to treble market capitalisation to $100,000 million within two years by releasing government stock and to improve trading volumes by persuading institutional investors to release more of the stock they hold in listed companies.

'The government pension funds hold about 15 per cent of total market capitalisation,' said Tabrizi. 'We have a very young population so the funds are taking lots of money and paying very little now. They need to increase their asset value over the next few years, but I don't want to force anybody to open up and list stock.'