The best-performing market in the Gulf is also the hardest for foreigners to understand.

Investors have pushed up the value of shares on the Tehran Stock Exchange as more of Iran’s state-owned companies have floated stakes. The market’s main index, the Tedpix, has grown by 41 per cent since the start of the year, while markets in the rest of the Gulf have lost value.

The MSCI GCC index, which measures the performance of seven major Gulf markets, has lost 17 per cent of its value since the beginning of 2008. Emerging markets as a whole have fallen by 21 per cent.

So far, the Tedpix has been driven by domestic investors, including wealthy Iranians, public sector pension funds and the investment arms of state-owned banks.

For the index to prosper in the longer term, foreign investors need to make significant share purchases. The stock exchange has no restrictions on foreign ownership, but few foreigners trade in the market.

There are many reasons why investors from elsewhere in the Gulf are avoiding it. Listed companies often provide little information about their workings. When Telecommunications Company of Iran (TCI) floated a 5 per cent stake on 9 August, potential investors only had an unaudited financial statement from the previous financial year to guide them.

The government wants to sell a further 26 per cent stake in TCI before the end of the year, but the lack of transparency will be a problem. Foreign funds will want clearer insights into a company’s strategy as well as audited accounts before they follow domestic investors.

Tehran has a lot to do before it can call the Tehran Stock Exchange a mature market.