After losing more than 40 per cent of its value in just three months, the Tehran Stock Exchange (TSE) looks out for the count. The Tepix all-share index averaged 10,083 points in November, compared with 12,308 in June and well below its all-time high of 13,882 in August 2004.

But the improved outlook on the nuclear issue, the appointment of a new - albeit inexperienced - TSE secretary-general, upcoming implementation of the new capital markets law and the temptation of bargain stocks sparked a revival in early December. 'The nuclear issue has really turned things around,' says Albrecht Frischenschlager, director at the local Atieh Bahar Consulting. 'There's a perception here that the West has acknowledged in principle that Iran can have uranium enrichment and that the threat of sanctions has been averted.'

In another development, Ali Salehabadi, a 27-year-old economics graduate, was appointed in late November to replace the outgoing TSE secretary-general, Hossein Abdoh Tabrizi. Several better-known economists and officials are understood to have turned down the job, which recent poor performances have given the reputation of a poisoned chalice. The jury is out on the new appointment, which highlights President Ahmadinejad's preference for youthful enthusiasm over past management experience. Salehabadi has not yet made any significant strategic statements beyond general ambitions to grow the TSE and increase privatisation.

With a new secretary-general in place, investors and analysts are now awaiting the implementation of the new stock markets law, which in mid-November won approval from the Majlis (parliament). The legislation is set to improve regulation of the primary market, to give the TSE a more modern operating framework and to place more emphasis on issues such as insider trading.

Another factor which it is hoped will contribute to a renewed market rally is the recent fall in share prices, analysts say. 'Due to the substantial decline, many stocks have become very cheap, so for longer-term investors this is a good time to buy,' says Frischenschlager. 'The average price-to-earnings ratio has gone down from 12-13 to 8-9.'

In addition, three funds in the range of $30 million-200 million are understood to have been prepared for launch in the coming months. The funds aim to pick up on government proposals to list large amounts of stock on the TSE.

Several privatisations scheduled for the coming year could provide an additional stimulus to the market, although Ahmadinejad's administration has so far made little effort to move the plans forward.