1 00:00:10,560 --> 00:00:14,040 Speaker 1: Hello, and welcome to another episode of the All Thoughts podcast. 2 00:00:14,160 --> 00:00:18,319 Speaker 1: I'm Tracy Allaway and I'm Joe Wisenthal. So, Joe, we 3 00:00:18,400 --> 00:00:23,720 Speaker 1: had a pretty eventful week in markets recently. Yeah, pretty 4 00:00:23,760 --> 00:00:27,560 Speaker 1: extraordinary start to the week are really or I should 5 00:00:27,560 --> 00:00:32,360 Speaker 1: say the start to the first trading day of the 6 00:00:32,440 --> 00:00:36,680 Speaker 1: year was really strong, and then almost immediately thereafter, we 7 00:00:36,760 --> 00:00:40,640 Speaker 1: got the news about the Iranian general being killed, and 8 00:00:40,800 --> 00:00:46,040 Speaker 1: suddenly that has been the focus of markets in repercussions 9 00:00:46,040 --> 00:00:49,839 Speaker 1: of such So the Trump administration killed around top general 10 00:00:49,960 --> 00:00:54,120 Speaker 1: Cassim Solomoni, and then that knocked markets immediately. But then 11 00:00:54,160 --> 00:00:58,880 Speaker 1: a few days later you had Iran retaliating against that 12 00:00:59,120 --> 00:01:02,320 Speaker 1: killing by fire orring a series of missiles at US 13 00:01:02,400 --> 00:01:06,720 Speaker 1: Iraqi air bases in Iraq, and that caused yet another 14 00:01:06,760 --> 00:01:09,600 Speaker 1: sell off. I think at one point US equity futures 15 00:01:09,600 --> 00:01:12,200 Speaker 1: were down something like one point seven and we saw 16 00:01:12,360 --> 00:01:16,400 Speaker 1: gold spike up to a six dollars per ounce. But 17 00:01:17,640 --> 00:01:21,560 Speaker 1: did anyone ever stop to ask what was going on 18 00:01:21,959 --> 00:01:26,240 Speaker 1: with Iranian stocks at that same time? I certainly did 19 00:01:26,240 --> 00:01:28,600 Speaker 1: not stop to ask that question, and I did not 20 00:01:29,080 --> 00:01:32,800 Speaker 1: think about it for various reasons, which will get into 21 00:01:33,040 --> 00:01:37,679 Speaker 1: one point that I we should just make before moving on, 22 00:01:37,880 --> 00:01:40,880 Speaker 1: is that part of what's been interesting about US markets 23 00:01:41,440 --> 00:01:44,480 Speaker 1: has been the degree of resilience. So even with all 24 00:01:44,520 --> 00:01:48,240 Speaker 1: these headlines that totally called people by surprise, and we 25 00:01:48,360 --> 00:01:52,120 Speaker 1: have markets your record highs, the volatility and the headlines 26 00:01:52,160 --> 00:01:57,680 Speaker 1: haven't driven domestic US markets sustainably lower. In fact, as 27 00:01:57,720 --> 00:02:01,160 Speaker 1: of this moment, there basically at all time highs. Yet 28 00:02:01,200 --> 00:02:06,080 Speaker 1: again quite surprising to some. But you're totally right that 29 00:02:06,120 --> 00:02:10,440 Speaker 1: there has been much less focus on regional stock markets, 30 00:02:10,480 --> 00:02:15,360 Speaker 1: including the Tehran Stock Exchange, which exists but which gets 31 00:02:15,480 --> 00:02:19,359 Speaker 1: virtually zero discussion. Well, I'm being somewhat facetious because I 32 00:02:19,360 --> 00:02:22,440 Speaker 1: think everyone knows why we don't talk about Iranian stocks 33 00:02:22,480 --> 00:02:25,959 Speaker 1: that much, and that's because of U S sanctions, of course, 34 00:02:26,000 --> 00:02:30,040 Speaker 1: and the fact that that particular market and economy, UH 35 00:02:30,160 --> 00:02:33,720 Speaker 1: and country really is cut off from large parts of 36 00:02:33,760 --> 00:02:37,800 Speaker 1: the world. But there is a Taran stock exchange, there 37 00:02:37,960 --> 00:02:40,320 Speaker 1: is a stock market, and I think it would be 38 00:02:40,360 --> 00:02:43,560 Speaker 1: really really interesting to find out exactly what happened in 39 00:02:43,639 --> 00:02:46,280 Speaker 1: that market over the past week or so, and also 40 00:02:46,360 --> 00:02:49,320 Speaker 1: just find out generally how it works. Not only do 41 00:02:49,360 --> 00:02:52,520 Speaker 1: you have geopolitical risk, but you also have these really 42 00:02:52,600 --> 00:02:56,880 Speaker 1: stringent sanctions. Yeah, no, I I've you know, I'm aware 43 00:02:56,880 --> 00:02:59,360 Speaker 1: of the market exists, but I don't know anything about it. 44 00:02:59,400 --> 00:03:01,440 Speaker 1: I don't know can invest in it. I don't know 45 00:03:01,480 --> 00:03:04,800 Speaker 1: how liquid it is. I don't know how much retail 46 00:03:04,880 --> 00:03:08,880 Speaker 1: participation or what are the big companies. I literally know 47 00:03:08,960 --> 00:03:12,639 Speaker 1: nothing about the Toronto Star Exchange. Right, Well, let's find out. 48 00:03:12,800 --> 00:03:15,720 Speaker 1: We have the perfect guest to walk us through it. 49 00:03:15,720 --> 00:03:19,760 Speaker 1: It's match avoid Teel, who runs the only European asset 50 00:03:19,840 --> 00:03:25,600 Speaker 1: manager focused on Iranian stocks company called Amtalon Capital. Match it. 51 00:03:25,760 --> 00:03:28,160 Speaker 1: Thank you so much for coming on. Hi, thank you 52 00:03:28,200 --> 00:03:31,640 Speaker 1: for having me. So, I guess the obvious question to 53 00:03:31,760 --> 00:03:35,320 Speaker 1: start out with is how did you end up in 54 00:03:35,360 --> 00:03:40,120 Speaker 1: this space? Because I don't think your name sounds very Iranian. 55 00:03:41,480 --> 00:03:45,400 Speaker 1: Oh no Muchie is a typical Polish name. So um, 56 00:03:45,440 --> 00:03:51,320 Speaker 1: I'm from Poland race in Warsaw, moved to London when 57 00:03:51,320 --> 00:03:54,120 Speaker 1: I got my first job in JP Morgan, and I've 58 00:03:54,160 --> 00:03:56,720 Speaker 1: been there ever since, and I had zero connection to 59 00:03:56,800 --> 00:04:00,960 Speaker 1: you run. So what caught my attention? It's obviously the 60 00:04:00,960 --> 00:04:03,480 Speaker 1: irun deal that was signed in two thousands fifteen and 61 00:04:03,520 --> 00:04:08,320 Speaker 1: implemented in two thousands sixteen. I also was just aware 62 00:04:08,480 --> 00:04:12,400 Speaker 1: that there was a stock market in Irun. Because we 63 00:04:12,560 --> 00:04:17,719 Speaker 1: used to run global equity long short portfolios across developed 64 00:04:17,720 --> 00:04:22,720 Speaker 1: an emerging market, so including places like Kenya, Vietnam, China, Asias, 65 00:04:22,960 --> 00:04:25,960 Speaker 1: a lot of different like niche markets, and Iran was 66 00:04:26,000 --> 00:04:29,719 Speaker 1: always there is something potentially interested, interesting, but we couldn't 67 00:04:29,760 --> 00:04:32,320 Speaker 1: touch it, so so no one did anything. And then 68 00:04:32,360 --> 00:04:34,920 Speaker 1: when in two thousand and sixteen the country opened up 69 00:04:35,360 --> 00:04:39,719 Speaker 1: for well pretty much everyone except for US investors, I 70 00:04:39,800 --> 00:04:43,120 Speaker 1: got interested. I did some research. I realized that there 71 00:04:43,200 --> 00:04:45,880 Speaker 1: is a proper stock market. And this is what got 72 00:04:45,880 --> 00:04:48,479 Speaker 1: me really excited, because you know, there is this huge 73 00:04:48,520 --> 00:04:52,080 Speaker 1: potential growth story for Irun as a country of you know, 74 00:04:52,120 --> 00:04:58,360 Speaker 1: eighty three million people, educated young population with wages right 75 00:04:58,400 --> 00:05:02,560 Speaker 1: now lower than in Vietnam, with you know, diversified economy 76 00:05:02,640 --> 00:05:05,000 Speaker 1: with the largest oil and gas reserves in the world, 77 00:05:05,360 --> 00:05:08,200 Speaker 1: but this is only fifteen percent of g DT. You know, 78 00:05:08,279 --> 00:05:11,640 Speaker 1: it's a good thing about being under sanctions for so 79 00:05:11,720 --> 00:05:14,679 Speaker 1: long that they had to develop all the different sectors 80 00:05:14,680 --> 00:05:17,480 Speaker 1: of the economy. But then for me um as a 81 00:05:17,560 --> 00:05:20,919 Speaker 1: portfolio investor, what was exciting is that there is a 82 00:05:20,960 --> 00:05:25,800 Speaker 1: stock market with six hundred stocks listed, hundred thirty billion 83 00:05:25,839 --> 00:05:30,000 Speaker 1: dollar market cap and daily liquidity of roughly hundred fifty 84 00:05:30,000 --> 00:05:33,359 Speaker 1: million dollars per day on average UM. So it's a 85 00:05:33,360 --> 00:05:36,719 Speaker 1: proper market. And the best thing is was that you 86 00:05:36,800 --> 00:05:40,200 Speaker 1: had the lowest valuations in the world. We're talking about 87 00:05:40,279 --> 00:05:43,279 Speaker 1: you know, four times earnings and these learnings are growing. 88 00:05:43,560 --> 00:05:46,680 Speaker 1: And there are no foreign investors so or foreign money 89 00:05:46,680 --> 00:05:49,840 Speaker 1: that got invested. There was less than half a percent 90 00:05:49,920 --> 00:05:52,279 Speaker 1: of the market cap. So you know, when I when 91 00:05:52,279 --> 00:05:54,640 Speaker 1: I when I saw all this, I just told my 92 00:05:54,640 --> 00:05:57,479 Speaker 1: wife basically that I bought a ticket to tear Run. 93 00:05:57,720 --> 00:06:00,680 Speaker 1: I didn't know anyone there, so I just arranged a 94 00:06:00,720 --> 00:06:03,640 Speaker 1: couple of meetings with the local brokers when they're you know, 95 00:06:03,720 --> 00:06:06,880 Speaker 1: opened accounts for myself, tested everything with my own money. 96 00:06:07,480 --> 00:06:09,760 Speaker 1: It worked, so I decided to set up a fund 97 00:06:09,960 --> 00:06:13,560 Speaker 1: that would be focused on this particular opportunity. So let's 98 00:06:13,600 --> 00:06:18,440 Speaker 1: talk about the restrictions on who can invest. You're based 99 00:06:18,480 --> 00:06:24,279 Speaker 1: in London. Anyone in Europe is allowed under current sanctions 100 00:06:24,320 --> 00:06:27,840 Speaker 1: regimes to invest, but I take it in the US 101 00:06:27,880 --> 00:06:31,640 Speaker 1: it's completely off limits. So you have two most important 102 00:06:31,640 --> 00:06:35,280 Speaker 1: types of types of sanctions. Primary sanctions that say that 103 00:06:35,880 --> 00:06:40,880 Speaker 1: US persons cannot touch you run. We cannot accept investments 104 00:06:40,920 --> 00:06:44,360 Speaker 1: from US investors. We as a fund cannot use US 105 00:06:44,440 --> 00:06:48,640 Speaker 1: dollar or US banks. And then you have secondary sanctions 106 00:06:48,839 --> 00:06:53,520 Speaker 1: which say that no one else should do business with 107 00:06:53,760 --> 00:06:58,400 Speaker 1: a long list of certain entities, both individual and corporate 108 00:06:58,760 --> 00:07:01,159 Speaker 1: entities that are on the s d N is on 109 00:07:01,200 --> 00:07:04,520 Speaker 1: the sanctions list. And also there is a list of 110 00:07:04,600 --> 00:07:08,120 Speaker 1: sectors or activities that you shouldn't be doing, like you know, 111 00:07:08,160 --> 00:07:12,160 Speaker 1: physical training in oil obviously, so you know, big part 112 00:07:12,160 --> 00:07:15,560 Speaker 1: of our job is studiolitis actually, and we have you know, 113 00:07:15,600 --> 00:07:18,440 Speaker 1: we have a special you know, Washington based sanctions lawyer 114 00:07:18,520 --> 00:07:20,560 Speaker 1: that is telling us what we can do, what we 115 00:07:20,600 --> 00:07:23,680 Speaker 1: cannot do. There's a lot of work investing in Iran. 116 00:07:23,800 --> 00:07:26,520 Speaker 1: It's actually before you actually get to invest, you have 117 00:07:26,640 --> 00:07:29,760 Speaker 1: to do a lot of legal work. And then investing 118 00:07:29,800 --> 00:07:34,840 Speaker 1: itself is actually easy. So who does your typical client 119 00:07:35,280 --> 00:07:37,200 Speaker 1: end up being? Like, can you give us a sense 120 00:07:37,240 --> 00:07:40,080 Speaker 1: of who they are? But also what are they looking 121 00:07:40,160 --> 00:07:42,960 Speaker 1: for out of the market? Is it, you know, is 122 00:07:42,960 --> 00:07:47,200 Speaker 1: it a steady stream of dividends? Because capital appreciation seems 123 00:07:47,600 --> 00:07:50,680 Speaker 1: kind of difficult when you're cut off from a big 124 00:07:50,760 --> 00:07:53,800 Speaker 1: chunk of the amount of capital in the global economy 125 00:07:54,680 --> 00:07:57,120 Speaker 1: that will be surprising to hear, but this is actually 126 00:07:57,960 --> 00:08:02,680 Speaker 1: the best performing equity market of two nine nineteen. Sorry, 127 00:08:02,760 --> 00:08:06,400 Speaker 1: and in dollar terms. So last year the main index 128 00:08:06,440 --> 00:08:10,640 Speaker 1: of Terrem Stock Exchange doubled or precisely went up by 129 00:08:12,960 --> 00:08:17,000 Speaker 1: in dollar terms. And when you check Bloomberg for example, 130 00:08:17,120 --> 00:08:20,120 Speaker 1: for the you know, you start all the indices by 131 00:08:20,120 --> 00:08:22,400 Speaker 1: the performance. You don't see it because it's not in 132 00:08:22,480 --> 00:08:26,360 Speaker 1: your database. But but yeah, that's but that's that's that's 133 00:08:26,400 --> 00:08:29,440 Speaker 1: the reality. So it's actually the best performing equity market 134 00:08:29,480 --> 00:08:32,200 Speaker 1: that no one knows about. So you are looking for 135 00:08:32,320 --> 00:08:36,480 Speaker 1: capital gains, absolutely there. So who are the clients than 136 00:08:36,559 --> 00:08:39,160 Speaker 1: that that are that are interested in the space? So 137 00:08:39,200 --> 00:08:40,920 Speaker 1: I get the return, But you still have to have 138 00:08:41,000 --> 00:08:43,760 Speaker 1: this conversation about investing and what a lot of people 139 00:08:44,000 --> 00:08:48,679 Speaker 1: would consider a relatively risky market. Oh yes, absolutely so, 140 00:08:48,720 --> 00:08:51,280 Speaker 1: first of all, all the investors that we have our 141 00:08:51,320 --> 00:08:54,320 Speaker 1: high network, individuals from across Europe. It's too early for 142 00:08:54,400 --> 00:08:58,360 Speaker 1: institutions to to get into the market, and all of 143 00:08:58,400 --> 00:09:02,880 Speaker 1: these investors are very aware that you know, it's it's 144 00:09:02,960 --> 00:09:06,200 Speaker 1: it's not a relatively risky market, it's the very risky market. 145 00:09:06,240 --> 00:09:10,559 Speaker 1: I mean, investment risks are actually quite limited. I mean 146 00:09:10,559 --> 00:09:14,120 Speaker 1: when you're buying assets at four times net earnings and 147 00:09:14,160 --> 00:09:17,000 Speaker 1: those earnings are growing in you know, high double digits 148 00:09:17,000 --> 00:09:20,840 Speaker 1: every year. Investment risks are low, but you have geopolitical risks. 149 00:09:20,880 --> 00:09:22,720 Speaker 1: I mean it's not only run, it's it's the whole 150 00:09:22,720 --> 00:09:25,960 Speaker 1: Middle East. But you are getting paid a lot to 151 00:09:26,040 --> 00:09:28,680 Speaker 1: take those risks. I mean even if you invest in 152 00:09:28,679 --> 00:09:31,600 Speaker 1: in local treasury bills. I mean right now these are 153 00:09:31,600 --> 00:09:33,640 Speaker 1: on on sign on the sanctions list that you wouldn't 154 00:09:33,640 --> 00:09:37,880 Speaker 1: be able to but local investors get paid two on 155 00:09:37,960 --> 00:09:41,600 Speaker 1: short term government bills. You have dividend fields off you know, 156 00:09:41,720 --> 00:09:45,280 Speaker 1: between ten and twenty percent, So you can very often 157 00:09:45,280 --> 00:09:48,000 Speaker 1: find companies like utility companies that pay you twenty percent 158 00:09:48,080 --> 00:09:52,400 Speaker 1: dividend fields. But the biggest opportunity is in the companies 159 00:09:52,400 --> 00:09:56,960 Speaker 1: that grow their earnings. So all of the last year's rally, 160 00:09:57,040 --> 00:09:59,720 Speaker 1: which was super counterintuitive because you know, it was in 161 00:09:59,720 --> 00:10:02,360 Speaker 1: such a big contrast to the headlines that you you know, 162 00:10:02,440 --> 00:10:05,800 Speaker 1: kept on receiving about I run about the GDP about 163 00:10:05,840 --> 00:10:09,640 Speaker 1: you know, oil exports going down, but oil is not listed. 164 00:10:09,679 --> 00:10:12,120 Speaker 1: I mean you have a couple of refineries listed, but 165 00:10:12,320 --> 00:10:15,760 Speaker 1: oil exploration is not listed. What is interesting are first 166 00:10:15,760 --> 00:10:20,640 Speaker 1: of all exporters and mainly regional exporters. So when you 167 00:10:20,640 --> 00:10:22,600 Speaker 1: look at you RUN, it's eighty three million people, but 168 00:10:22,679 --> 00:10:25,920 Speaker 1: you RUN plus neighboring countries is four hundred million people, 169 00:10:26,160 --> 00:10:28,679 Speaker 1: and you RUN is well placed to expert to those countries. 170 00:10:28,920 --> 00:10:31,959 Speaker 1: For example, countries like you know, Iraq and Afghanistan, they 171 00:10:32,000 --> 00:10:35,440 Speaker 1: have seventy eight million people and don't produce much, so 172 00:10:35,559 --> 00:10:37,400 Speaker 1: they have to import a lot of the stuff that 173 00:10:37,400 --> 00:10:40,400 Speaker 1: they consume, and they do it very often from Irun. 174 00:10:40,960 --> 00:10:43,599 Speaker 1: So this is one thing. But actually the biggest beneficiaries 175 00:10:43,920 --> 00:10:47,960 Speaker 1: last year of sanctions and of the currency depreciation that 176 00:10:48,040 --> 00:10:52,439 Speaker 1: happened the year before were domestic companies. Why because after 177 00:10:52,920 --> 00:10:56,080 Speaker 1: Iranian real so the local currency went down in two 178 00:10:56,080 --> 00:11:00,719 Speaker 1: thousand and eighteen by seventy and then addition of sanctions 179 00:11:01,400 --> 00:11:04,640 Speaker 1: made trade even more difficult. So you know, it was 180 00:11:04,679 --> 00:11:08,200 Speaker 1: difficult to process payments, to find you know, shipping, so 181 00:11:08,280 --> 00:11:11,920 Speaker 1: the logistics were difficult, insurance and so on. So imports 182 00:11:11,920 --> 00:11:16,760 Speaker 1: collapsed and whatever you know, cheap products were being imported 183 00:11:16,800 --> 00:11:20,040 Speaker 1: from China, they were no longer competitive and it was 184 00:11:20,080 --> 00:11:22,320 Speaker 1: more difficult to get them to be run anyway, So 185 00:11:22,440 --> 00:11:25,520 Speaker 1: local producers started gaining market share and we could see 186 00:11:25,520 --> 00:11:28,080 Speaker 1: that both you know, volumes were going out for the 187 00:11:28,120 --> 00:11:31,640 Speaker 1: local companies and they were able to raise prices faster 188 00:11:31,720 --> 00:11:34,960 Speaker 1: than the inflation. So actually the domestic companies And and 189 00:11:34,960 --> 00:11:37,640 Speaker 1: then when I when I was speaking about domestic companies, it's, uh, 190 00:11:38,320 --> 00:11:41,920 Speaker 1: you know, our best positions, best performing positions were you know, 191 00:11:41,960 --> 00:11:45,839 Speaker 1: a shampoo maker and chocolate biscuits producer, and those were 192 00:11:45,840 --> 00:11:48,559 Speaker 1: the types of companies that gained the most. And this 193 00:11:48,640 --> 00:11:51,600 Speaker 1: is not exactly the type of investment that you're thinking 194 00:11:51,640 --> 00:11:53,480 Speaker 1: about when you, when you know, go to invest in 195 00:11:53,480 --> 00:11:57,000 Speaker 1: your run. God, I already I have so many questions 196 00:11:57,080 --> 00:12:00,520 Speaker 1: just listening to that. I'm already so fascinated. One thing 197 00:12:00,559 --> 00:12:04,400 Speaker 1: that I'm always sort of interested in when people invest 198 00:12:04,559 --> 00:12:09,079 Speaker 1: in sort of extreme emerging frontier type markets that are 199 00:12:09,120 --> 00:12:12,400 Speaker 1: well out of the mainstream is data quality. So first 200 00:12:12,400 --> 00:12:14,760 Speaker 1: of all, as you noticed, like I can't even pull 201 00:12:14,880 --> 00:12:19,679 Speaker 1: up a torn stock exchange quote on on my Bloomberg 202 00:12:20,480 --> 00:12:25,720 Speaker 1: from your perspective from your seat in London, how confident 203 00:12:26,000 --> 00:12:31,360 Speaker 1: and how difficult is it to get transparent data on 204 00:12:31,480 --> 00:12:35,959 Speaker 1: both sort of trading volume the exchange and companies themselves 205 00:12:36,280 --> 00:12:38,760 Speaker 1: to the point where you can like feel confident that 206 00:12:38,840 --> 00:12:44,480 Speaker 1: you have a good handle on who's doing what and how. Well. Yeah, 207 00:12:44,559 --> 00:12:48,480 Speaker 1: so that's that's a very important point. And I was 208 00:12:48,559 --> 00:12:52,240 Speaker 1: really surprised when I started looking at the local data. 209 00:12:52,280 --> 00:12:55,560 Speaker 1: So Bloomberg obviously doesn't cover it. So so I no 210 00:12:55,600 --> 00:12:58,480 Speaker 1: longer have a Bloomberg terminal along my desk, but I 211 00:12:58,559 --> 00:13:02,080 Speaker 1: have like a local UM not a Bloomberg equivalent, but 212 00:13:02,440 --> 00:13:07,640 Speaker 1: databases in English that where I have quotally financial data 213 00:13:07,679 --> 00:13:10,439 Speaker 1: for the last twenty years for four hundred biggest stalks, 214 00:13:10,720 --> 00:13:14,160 Speaker 1: plus obviously all the price data, everything in English and 215 00:13:14,280 --> 00:13:17,680 Speaker 1: U you know, easy to use format. Let's say, maybe 216 00:13:17,679 --> 00:13:21,760 Speaker 1: not similar to Bloomberg. This direction is that the Iranian 217 00:13:22,400 --> 00:13:27,720 Speaker 1: domestic competitor to bloom That's too much to say, I guess, 218 00:13:27,720 --> 00:13:31,599 Speaker 1: but they would love to hear that. Yet, what's it 219 00:13:31,679 --> 00:13:36,839 Speaker 1: called UM? It's called UM, It's called boors View the 220 00:13:36,880 --> 00:13:40,200 Speaker 1: Google Yah. So so so this is one good source. 221 00:13:40,440 --> 00:13:42,600 Speaker 1: And then but in terms of the quality of the 222 00:13:42,720 --> 00:13:48,640 Speaker 1: data itself, companies have to report audited, quartally and annual reports, 223 00:13:48,679 --> 00:13:51,880 Speaker 1: just as they are reporting in Europe or the US. 224 00:13:51,920 --> 00:13:55,880 Speaker 1: They have local accounting standards, but they are moving towards 225 00:13:56,000 --> 00:14:00,800 Speaker 1: international financial reporting standards and the local ones are easy 226 00:14:00,840 --> 00:14:03,680 Speaker 1: to read anyway, But there are two interesting things here. 227 00:14:03,920 --> 00:14:07,200 Speaker 1: So first of all, okay, you may see the data, 228 00:14:07,280 --> 00:14:09,640 Speaker 1: the numbers, but at the back of your head, you 229 00:14:09,640 --> 00:14:12,120 Speaker 1: you you you have to remember that maybe you should 230 00:14:12,120 --> 00:14:15,000 Speaker 1: not be trusting all the numbers that you're looking at, right, 231 00:14:15,040 --> 00:14:17,880 Speaker 1: And I did invest in China a lot in you know, 232 00:14:18,080 --> 00:14:22,280 Speaker 1: Chinese companies listed in Shankai, even worse where Chinese companies 233 00:14:22,360 --> 00:14:25,200 Speaker 1: listed in Singapore, and and and and so a lot 234 00:14:25,240 --> 00:14:27,840 Speaker 1: of fraus so so, so I was quite quite cautious here. 235 00:14:27,880 --> 00:14:31,080 Speaker 1: But look, imagine that the company is showing you these 236 00:14:31,120 --> 00:14:35,080 Speaker 1: were our sales last year, this was our net earnings, 237 00:14:35,240 --> 00:14:38,200 Speaker 1: and our payout ratio with so we're gonna pay out 238 00:14:38,440 --> 00:14:40,880 Speaker 1: most of our net earnings, almost all of our net 239 00:14:40,880 --> 00:14:44,320 Speaker 1: earnings as dividend. And then you're getting this dividend, receiving 240 00:14:44,360 --> 00:14:47,320 Speaker 1: this dividend into your account, so you know this is 241 00:14:47,360 --> 00:14:50,360 Speaker 1: something real, right, So you can no longer question whether 242 00:14:50,400 --> 00:14:53,000 Speaker 1: the net earnings figure was was right or wrong because 243 00:14:53,080 --> 00:14:56,200 Speaker 1: you actually received most of it as dividend and and 244 00:14:56,200 --> 00:14:59,280 Speaker 1: and most companies have very high dividend yields and and 245 00:15:00,040 --> 00:15:03,360 Speaker 1: pay out ratios. So this valid date is the data Moreover, 246 00:15:03,680 --> 00:15:06,560 Speaker 1: what I get there is something is actually something that 247 00:15:06,600 --> 00:15:10,600 Speaker 1: I don't get another markets, which is monthly sales data. 248 00:15:10,720 --> 00:15:14,400 Speaker 1: So all the big and medium sized companies are required 249 00:15:14,440 --> 00:15:19,360 Speaker 1: to report on the monthly basis revenue across their main 250 00:15:19,600 --> 00:15:25,320 Speaker 1: product categories and split into volumes and unit prices, which 251 00:15:25,360 --> 00:15:28,040 Speaker 1: is a lot of data that you can analyze and 252 00:15:28,040 --> 00:15:30,600 Speaker 1: and then and after two months you pretty much know 253 00:15:30,680 --> 00:15:33,680 Speaker 1: what to expect from the next quarterly earnings. And the 254 00:15:33,720 --> 00:15:36,360 Speaker 1: best thing is that not many people are doing this 255 00:15:36,680 --> 00:15:39,480 Speaker 1: this work in iround. Why because you know, almost all 256 00:15:39,480 --> 00:15:42,840 Speaker 1: the local investors are retail investors to think of China 257 00:15:43,040 --> 00:15:46,760 Speaker 1: A shares or Vietnam. Before funds started investing there has 258 00:15:47,320 --> 00:15:51,720 Speaker 1: literally almost all of the local investors are non sophisticated 259 00:15:51,840 --> 00:15:54,640 Speaker 1: retail investors. So everyone is pretty much you know, short 260 00:15:54,720 --> 00:15:58,320 Speaker 1: term momentum right without trying to analyze stuff, trying to 261 00:15:58,360 --> 00:16:01,920 Speaker 1: focus any numbers. So what we're doing is actually, you know, 262 00:16:02,080 --> 00:16:04,520 Speaker 1: pretty simple work. I mean, we're just the real work, 263 00:16:04,800 --> 00:16:09,160 Speaker 1: building models, analyzing hundreds of data per month for most 264 00:16:09,160 --> 00:16:12,520 Speaker 1: of the companies. And it's great because for a professional investor, 265 00:16:12,560 --> 00:16:14,360 Speaker 1: you know, you do your work and you get rewarded. 266 00:16:15,000 --> 00:16:17,360 Speaker 1: So I mean, one of the big differences between being 267 00:16:17,560 --> 00:16:22,520 Speaker 1: a domestic retail investor versus you know, sophisticated international investor 268 00:16:22,800 --> 00:16:27,400 Speaker 1: is the currency conversion. How big a factor is that 269 00:16:27,720 --> 00:16:29,880 Speaker 1: for you when it comes to your investment strategy And 270 00:16:29,920 --> 00:16:34,240 Speaker 1: how difficult is it to get money from Iran converted 271 00:16:34,280 --> 00:16:39,080 Speaker 1: into other currencies and other accounts outside of Iran. Yeah, 272 00:16:39,200 --> 00:16:43,960 Speaker 1: so exchanging money is not an issue. There is maybe 273 00:16:44,000 --> 00:16:46,920 Speaker 1: right now it's better, but over the last previous two years, 274 00:16:46,960 --> 00:16:50,160 Speaker 1: there was a bit of a chaos with the exchange rates. 275 00:16:50,320 --> 00:16:53,640 Speaker 1: So you had, you know, three different exchange rate that 276 00:16:54,680 --> 00:16:58,480 Speaker 1: we're making. You know, even the locals got confused in 277 00:16:58,600 --> 00:17:00,800 Speaker 1: terms of which one to use and which one they 278 00:17:01,160 --> 00:17:04,680 Speaker 1: should be using to value investments and someone. So, um, 279 00:17:04,720 --> 00:17:07,320 Speaker 1: you have the official rate, which basically no one is 280 00:17:07,400 --> 00:17:11,199 Speaker 1: using because this is a subsidized rate to import certain 281 00:17:11,240 --> 00:17:17,359 Speaker 1: pharmaceutical and agricultural goods. Then you have the NEMA platform rate, 282 00:17:17,520 --> 00:17:20,879 Speaker 1: which is where all the exporters and importers are required 283 00:17:20,960 --> 00:17:24,359 Speaker 1: to exchange their currency and this is where the biggest 284 00:17:24,359 --> 00:17:27,000 Speaker 1: liquidity is. And then you have the bazaar rate where 285 00:17:27,280 --> 00:17:30,840 Speaker 1: all the individual Uranians without any limits, they can they 286 00:17:30,840 --> 00:17:34,040 Speaker 1: can just trade usually you know, physical dollar bills right 287 00:17:34,080 --> 00:17:36,960 Speaker 1: on the bazaar, which which is super volatile, not very 288 00:17:37,000 --> 00:17:39,159 Speaker 1: liquids or whenever there is like a panic which we 289 00:17:39,200 --> 00:17:41,960 Speaker 1: saw many times over the previous year, and you know, 290 00:17:42,000 --> 00:17:43,800 Speaker 1: they were rushing to the bazaar to buy you know, 291 00:17:43,840 --> 00:17:47,520 Speaker 1: physical dollar bills and h and hide them under the mattress. 292 00:17:47,760 --> 00:17:51,920 Speaker 1: So right now, because after two eighteen when the currency 293 00:17:52,000 --> 00:17:57,280 Speaker 1: dropped by seven percent, two nineteen was stable and so 294 00:17:57,400 --> 00:17:59,760 Speaker 1: stable in terms of the currency, stable in terms of 295 00:18:00,080 --> 00:18:03,520 Speaker 1: actually got better in terms of economic activity because uncertainty 296 00:18:03,560 --> 00:18:07,440 Speaker 1: related to the U S sanctions went down and this 297 00:18:07,560 --> 00:18:12,479 Speaker 1: started feeding into the company's earnings. Hence the boolmarket in Iran. 298 00:18:12,880 --> 00:18:16,600 Speaker 1: But so so trading currency and all the exchange rates 299 00:18:16,600 --> 00:18:19,160 Speaker 1: I mean the NEMA rate and the buzz A rate converged. 300 00:18:19,400 --> 00:18:22,080 Speaker 1: So right now there is not much issue in terms 301 00:18:22,119 --> 00:18:25,800 Speaker 1: of exchanging, buying selling hard currency. The biggest problem is 302 00:18:25,840 --> 00:18:30,400 Speaker 1: always transferring money because there is a very short list 303 00:18:30,440 --> 00:18:33,679 Speaker 1: of banks that are still connected to you know, Iranian 304 00:18:33,680 --> 00:18:36,879 Speaker 1: banks via Swift. Not all Iranian banks are on the 305 00:18:37,520 --> 00:18:40,040 Speaker 1: as the end list. There is a couple of privately 306 00:18:40,160 --> 00:18:42,320 Speaker 1: owned banks that have nothing to do with sanctions. I 307 00:18:42,359 --> 00:18:44,840 Speaker 1: mean they are part of the financial system, which is 308 00:18:45,040 --> 00:18:48,280 Speaker 1: which is under sanctions. But but them as the entities 309 00:18:48,320 --> 00:18:51,359 Speaker 1: that they are, okay. But the list of you know, 310 00:18:51,640 --> 00:18:54,600 Speaker 1: foreign banks, Western banks that are happy to to to 311 00:18:54,640 --> 00:18:57,359 Speaker 1: deal with them is very very short, and these are 312 00:18:57,440 --> 00:19:23,080 Speaker 1: usually small, independent banks. Do you ever worry about some 313 00:19:24,320 --> 00:19:27,800 Speaker 1: risk in the future that there's some eventuality that your 314 00:19:27,800 --> 00:19:30,880 Speaker 1: money could just get completely stuck in around that there 315 00:19:30,960 --> 00:19:34,040 Speaker 1: could become a point in which there's no banks in 316 00:19:34,040 --> 00:19:36,119 Speaker 1: the West or in Europe that you have access to 317 00:19:36,560 --> 00:19:40,440 Speaker 1: that are willing to take money or take transfers from 318 00:19:40,440 --> 00:19:46,920 Speaker 1: an Iranian bank. Look think about two thous so before 319 00:19:47,359 --> 00:19:52,720 Speaker 1: Iran deal was implemented, financial system was completely cut off. 320 00:19:52,760 --> 00:19:55,600 Speaker 1: I mean, no one was dealing with Iranian banks, and 321 00:19:55,720 --> 00:20:00,680 Speaker 1: yet there was eight billion dollars per year of trade 322 00:20:00,840 --> 00:20:04,960 Speaker 1: between Iran and other countries. So you know, money will 323 00:20:05,000 --> 00:20:07,560 Speaker 1: always find its way. And how this was done is 324 00:20:07,840 --> 00:20:10,440 Speaker 1: you know, you had hundreds or I don't know, maybe 325 00:20:10,440 --> 00:20:15,439 Speaker 1: thousand's big number of intermediaries that act as you know, 326 00:20:15,560 --> 00:20:18,359 Speaker 1: market makers between those that want to move money and 327 00:20:18,400 --> 00:20:21,639 Speaker 1: move money out. And this has been actually you know, 328 00:20:21,840 --> 00:20:26,080 Speaker 1: working in the Middle East region, in the Europe world 329 00:20:26,160 --> 00:20:29,240 Speaker 1: for you know, actually for centuries. So banks may be 330 00:20:29,320 --> 00:20:32,040 Speaker 1: cut off but but it usually finds the way. Another 331 00:20:32,119 --> 00:20:34,760 Speaker 1: thing is that in general, sanctions used to be more 332 00:20:35,359 --> 00:20:37,960 Speaker 1: effective sometime ago, like ten years ago, up to ten 333 00:20:38,040 --> 00:20:40,240 Speaker 1: years ago, or up to five years ago. What I'm 334 00:20:40,280 --> 00:20:45,680 Speaker 1: seeing right now, especially on the smaller transaction levels, and 335 00:20:46,040 --> 00:20:49,480 Speaker 1: many countries are embracing it, is that people use more 336 00:20:49,520 --> 00:20:53,399 Speaker 1: and more often cryptocurrencies to transfer money because it's cheap 337 00:20:53,560 --> 00:20:57,840 Speaker 1: and it's fast, and it doesn't have any institutional problems. 338 00:20:58,080 --> 00:21:01,080 Speaker 1: I think it would be actually for all the let's 339 00:21:01,080 --> 00:21:04,120 Speaker 1: say troubled countries from Iran to venezuel and so wants 340 00:21:04,359 --> 00:21:07,680 Speaker 1: to to to embrace it. They obviously would still like 341 00:21:07,800 --> 00:21:10,160 Speaker 1: to control it, which is not that easy. So so 342 00:21:10,200 --> 00:21:12,439 Speaker 1: they are a bit puzzled in terms of what to do. 343 00:21:12,480 --> 00:21:16,520 Speaker 1: But I run actually legalized bitcoin mining recently, so maybe 344 00:21:16,560 --> 00:21:20,679 Speaker 1: maybe they're going this way. Another question that I always 345 00:21:20,680 --> 00:21:24,159 Speaker 1: have relating to markets like these, and honestly even in 346 00:21:24,200 --> 00:21:27,920 Speaker 1: more sophisticated, very developed financial markets, like if you hear 347 00:21:27,960 --> 00:21:31,800 Speaker 1: people talk about, say the Hong Kong market where Tracy is, 348 00:21:31,840 --> 00:21:34,720 Speaker 1: they'll be like, oh, yeah, it's rife with a related 349 00:21:34,800 --> 00:21:38,040 Speaker 1: party transaction and insider dealing, and you have to be 350 00:21:38,119 --> 00:21:43,800 Speaker 1: extremely careful. Talk to us about corporate governance within publicly 351 00:21:44,119 --> 00:21:49,760 Speaker 1: listed Iranian companies, how confident do you feel that they're 352 00:21:49,760 --> 00:21:52,040 Speaker 1: well run, that they're not just run for the benefit 353 00:21:52,119 --> 00:21:54,879 Speaker 1: of insiders? And did this sort of speak to again 354 00:21:55,440 --> 00:21:59,960 Speaker 1: the salience of the payout ratio metric when you're anal 355 00:22:00,080 --> 00:22:05,080 Speaker 1: rising companies in this market. Basically you have to judge 356 00:22:05,520 --> 00:22:07,480 Speaker 1: to see that the earnings actually make their way back 357 00:22:07,520 --> 00:22:11,440 Speaker 1: to shareholders. It's tricky because when you call the company, 358 00:22:11,480 --> 00:22:13,840 Speaker 1: you want to get more information. For example, so we 359 00:22:13,920 --> 00:22:17,160 Speaker 1: usually call the CFO when we want to understand more 360 00:22:17,200 --> 00:22:20,200 Speaker 1: about the manner of balance sheet or about the operations. 361 00:22:20,760 --> 00:22:23,680 Speaker 1: Sometimes they're just not interested in speaking with you. So 362 00:22:23,840 --> 00:22:29,000 Speaker 1: the idea of you know, valuing the financial investors as shareholders, 363 00:22:29,040 --> 00:22:31,920 Speaker 1: it's it's really not clear for them. So so here 364 00:22:31,960 --> 00:22:35,080 Speaker 1: it's you don't get good responses from them. Very often 365 00:22:35,080 --> 00:22:37,960 Speaker 1: you don't get good investor relations service in terms of 366 00:22:38,000 --> 00:22:40,680 Speaker 1: you know, corporate governments, whether all the money goes back 367 00:22:40,680 --> 00:22:44,119 Speaker 1: to you know, to all the shareholders or gets diverted 368 00:22:44,160 --> 00:22:47,679 Speaker 1: to friends and family or whoever. Well, you have to 369 00:22:47,760 --> 00:22:51,960 Speaker 1: look at earnings and the payout ratio and then if 370 00:22:52,000 --> 00:22:57,040 Speaker 1: those earnings are real learnings but could be even higher, 371 00:22:57,840 --> 00:22:59,600 Speaker 1: but they are not because you know, some of the 372 00:22:59,600 --> 00:23:02,800 Speaker 1: costs are actually friends and family or whoever. But then 373 00:23:02,800 --> 00:23:05,639 Speaker 1: I'm still paying four times for those earnings, for those 374 00:23:05,920 --> 00:23:08,679 Speaker 1: smaller earnings that they should be well, I don't know 375 00:23:08,720 --> 00:23:10,760 Speaker 1: it could be possible, but I guess I'm too fine 376 00:23:10,800 --> 00:23:13,240 Speaker 1: with it because it's four times those smaller earnings. So 377 00:23:13,280 --> 00:23:15,800 Speaker 1: there is even upside to this one, right, maybe it 378 00:23:15,840 --> 00:23:18,439 Speaker 1: should be three times the real learnings, and you know, 379 00:23:18,520 --> 00:23:22,600 Speaker 1: situation could improve. So so I'm definitely looking at evaluation 380 00:23:22,760 --> 00:23:26,480 Speaker 1: and and and pay out ratio, so understanding what's happening 381 00:23:26,480 --> 00:23:29,879 Speaker 1: to this money that the company is producing. So I 382 00:23:29,920 --> 00:23:34,160 Speaker 1: want to get to recent events and the escalation intentions 383 00:23:34,280 --> 00:23:38,160 Speaker 1: between the US and Iran, which Joe and I mentioned earlier. 384 00:23:38,760 --> 00:23:42,960 Speaker 1: What was it actually like trading the market during that 385 00:23:43,040 --> 00:23:46,080 Speaker 1: time and how did the market actually react? And I 386 00:23:46,119 --> 00:23:49,320 Speaker 1: genuinely don't know the answer to this, because, as you mentioned, 387 00:23:49,880 --> 00:23:53,320 Speaker 1: the trend stock exchange data is not on the Bloomberg terminal. 388 00:23:53,720 --> 00:23:56,760 Speaker 1: We do have regional data for all the other major 389 00:23:56,920 --> 00:23:59,560 Speaker 1: Middle East ind season, so I can judge from that 390 00:23:59,560 --> 00:24:02,959 Speaker 1: that Iran was probably hard hit. But I'm really curious 391 00:24:03,000 --> 00:24:08,080 Speaker 1: to hear your perspective about what exactly happened. Yes, So 392 00:24:08,400 --> 00:24:11,040 Speaker 1: the first of all, we didn't do any trading, so 393 00:24:11,080 --> 00:24:13,560 Speaker 1: we were just observing the market. On the first day 394 00:24:13,760 --> 00:24:17,159 Speaker 1: after the killing of sleet money, the market went the 395 00:24:17,200 --> 00:24:20,680 Speaker 1: limit down, which is minus five percent, so almost all 396 00:24:20,680 --> 00:24:23,960 Speaker 1: of the staffs went limit down. So people panicked obviously. 397 00:24:24,080 --> 00:24:28,480 Speaker 1: But what was interesting is the information that half of 398 00:24:28,560 --> 00:24:33,640 Speaker 1: the selling came from investors who got their trading license, 399 00:24:33,800 --> 00:24:37,000 Speaker 1: which means that they opened their first brokerage account within 400 00:24:37,040 --> 00:24:40,240 Speaker 1: the last nine months, so this ran in year, so 401 00:24:40,880 --> 00:24:45,280 Speaker 1: very unexperienced investors were new to the market. The next 402 00:24:45,320 --> 00:24:49,119 Speaker 1: day some of the local institutional investors that are in 403 00:24:49,200 --> 00:24:53,760 Speaker 1: the market started buying, mainly the biggest exporters, and the 404 00:24:53,800 --> 00:24:55,959 Speaker 1: market win is still down, but it was something like 405 00:24:56,000 --> 00:24:58,720 Speaker 1: minus minus one point five minus still depending on the 406 00:24:58,920 --> 00:25:02,840 Speaker 1: on the index. So altogether, if you want to take 407 00:25:02,840 --> 00:25:06,880 Speaker 1: into account the equity move plus the Essex move, you're 408 00:25:06,880 --> 00:25:10,400 Speaker 1: looking at let's say minus ten percent down here to date, 409 00:25:10,840 --> 00:25:15,119 Speaker 1: which to be honest, given the usual volatility of you know, 410 00:25:15,320 --> 00:25:20,119 Speaker 1: Terron stock exchange and the effects, is is not that huge. 411 00:25:20,280 --> 00:25:23,600 Speaker 1: So um, you know, those types of moves can happen 412 00:25:23,720 --> 00:25:28,480 Speaker 1: very easily. You know within any week, right, So at 413 00:25:28,560 --> 00:25:31,159 Speaker 1: some level, yes, these are big moves, but in the 414 00:25:31,240 --> 00:25:35,679 Speaker 1: grand scheme of things for a market that's inherently volatile 415 00:25:35,720 --> 00:25:40,199 Speaker 1: and a region that's very inherently volatile, and UH in 416 00:25:40,600 --> 00:25:45,440 Speaker 1: a specific geopolitical context in which one sort of always 417 00:25:45,480 --> 00:25:51,040 Speaker 1: expects potential escalation, your view is that it's not. It 418 00:25:51,160 --> 00:25:54,080 Speaker 1: wasn't that dramatic. And also, you know S and P 419 00:25:54,280 --> 00:25:58,320 Speaker 1: already had a chance to react positively to Donald Trump's 420 00:25:58,480 --> 00:26:01,720 Speaker 1: press conference, and Iran is closed because he Ruan is 421 00:26:01,760 --> 00:26:05,880 Speaker 1: trading from Saturday to Wednesday, So today and tomorrow it's 422 00:26:05,920 --> 00:26:08,840 Speaker 1: it's weekends in I run quick note so that people 423 00:26:09,040 --> 00:26:13,800 Speaker 1: listening to that we're recording at UH Thursday, January nine, 424 00:26:14,240 --> 00:26:17,440 Speaker 1: just something to bear in mind so that when people 425 00:26:17,480 --> 00:26:19,800 Speaker 1: finally when they get around till listening to it next week, 426 00:26:19,840 --> 00:26:24,160 Speaker 1: they're aware of when this conversation took place. So what's 427 00:26:24,240 --> 00:26:28,480 Speaker 1: the best case scenario at this point? I guess what's 428 00:26:28,520 --> 00:26:32,960 Speaker 1: the best case realistic scenario? Like how in your world 429 00:26:33,240 --> 00:26:37,000 Speaker 1: would you like events between Iran and the US to 430 00:26:37,160 --> 00:26:41,639 Speaker 1: unfold from here? I think that the event from this 431 00:26:41,720 --> 00:26:47,000 Speaker 1: week we're actually quite significant and potentially very positive because 432 00:26:47,040 --> 00:26:51,240 Speaker 1: look so the US assassinated the Iran in general, Iran 433 00:26:51,359 --> 00:26:56,080 Speaker 1: had to respond, and it was a very significant response 434 00:26:56,119 --> 00:26:59,040 Speaker 1: because for the first time they fired missiles at the 435 00:26:59,160 --> 00:27:05,280 Speaker 1: US military paces. So you don't need anything else to 436 00:27:05,400 --> 00:27:08,520 Speaker 1: start the war. So if if people wanted to go 437 00:27:08,840 --> 00:27:12,360 Speaker 1: to a proper military conflict, I mean, that was it right, 438 00:27:12,560 --> 00:27:17,280 Speaker 1: they could go into all out confrontation. And this was 439 00:27:17,320 --> 00:27:22,679 Speaker 1: a situation where I think the extreme outcomes became more likely. 440 00:27:22,840 --> 00:27:27,439 Speaker 1: So either we have like a proper military confrontation, or 441 00:27:28,000 --> 00:27:31,359 Speaker 1: things actually improved from here and perhaps you could have 442 00:27:31,440 --> 00:27:35,760 Speaker 1: like a diplomatic reopening. We've been investing in yourun as 443 00:27:35,840 --> 00:27:39,240 Speaker 1: long as Donald Trump as President of the United States, 444 00:27:39,240 --> 00:27:43,560 Speaker 1: so I got used to seeing, you know, the relations 445 00:27:43,600 --> 00:27:46,520 Speaker 1: between the countries getting worse and worse each quarter. So 446 00:27:46,600 --> 00:27:50,760 Speaker 1: that's that's my main environment in which I've been operating. 447 00:27:51,280 --> 00:27:56,240 Speaker 1: And actually after Trump's press conference, which I don't think 448 00:27:56,359 --> 00:27:59,760 Speaker 1: was just neutral and like, you know, if we managed 449 00:27:59,800 --> 00:28:03,040 Speaker 1: to avoid the confrontation this time, no, I think it 450 00:28:03,160 --> 00:28:07,360 Speaker 1: had a lot of positive signals, talking about UM working 451 00:28:07,400 --> 00:28:10,440 Speaker 1: together with Iran on anything like you know, fighting isis 452 00:28:10,560 --> 00:28:14,399 Speaker 1: and and some with some some common targets, or you know, 453 00:28:14,480 --> 00:28:18,320 Speaker 1: sending a signal that the US is open to peace 454 00:28:18,400 --> 00:28:20,800 Speaker 1: with any nation that is looking for it, UM and 455 00:28:20,840 --> 00:28:25,000 Speaker 1: someone it had a lot of positive signals and UM, 456 00:28:25,200 --> 00:28:29,359 Speaker 1: given that both countries actually went through a very difficult 457 00:28:29,440 --> 00:28:32,520 Speaker 1: test I mean with with those situations, and they passed it. 458 00:28:32,600 --> 00:28:34,920 Speaker 1: I mean there is no like you know, tension. It's 459 00:28:34,920 --> 00:28:38,680 Speaker 1: actually the escalation. This could be a major de escalation 460 00:28:38,760 --> 00:28:41,800 Speaker 1: going forward. I don't know about you know, restarting negotiations 461 00:28:41,840 --> 00:28:43,520 Speaker 1: and so one. This could take a lot of time. 462 00:28:43,560 --> 00:28:45,840 Speaker 1: I don't know if it's going to happen or or when. 463 00:28:46,320 --> 00:28:49,160 Speaker 1: But what I think is that actually we may have 464 00:28:49,160 --> 00:28:53,160 Speaker 1: seen a low point in relations between Iran and the US, 465 00:28:53,200 --> 00:28:57,880 Speaker 1: and it's also happening for the relations between Iran and 466 00:28:58,080 --> 00:29:01,880 Speaker 1: Arab countries like Saudi Rae, there or Ua. Over the 467 00:29:01,920 --> 00:29:04,840 Speaker 1: last six months, you had plenty of positive signals where 468 00:29:04,960 --> 00:29:07,760 Speaker 1: those countries started, um, you know, talking to each other 469 00:29:08,120 --> 00:29:12,160 Speaker 1: and also decreasing the level of tensions. So you know, 470 00:29:12,680 --> 00:29:18,840 Speaker 1: but being cautiously optimistic, but this could shape as UM 471 00:29:18,840 --> 00:29:22,160 Speaker 1: potentially the best duo politically speaking, the best year for 472 00:29:22,240 --> 00:29:25,160 Speaker 1: Iran since you know, two thousands sixteen, and when when 473 00:29:25,160 --> 00:29:29,040 Speaker 1: you're asking me about the best best case scenario. Long term, 474 00:29:29,080 --> 00:29:34,880 Speaker 1: this is the proper integration of Iran with international financial markets, 475 00:29:34,920 --> 00:29:37,760 Speaker 1: so mainly the banking system. And this will only happen 476 00:29:37,840 --> 00:29:41,160 Speaker 1: when the functions are off, so Iran in the US 477 00:29:41,600 --> 00:29:44,600 Speaker 1: make some sort of a deal when this happens and 478 00:29:44,880 --> 00:29:48,360 Speaker 1: the foreign capital starts flowing in to Iran. You know, 479 00:29:48,440 --> 00:29:50,800 Speaker 1: Iran gets to m s c I frontier markets with 480 00:29:50,880 --> 00:29:52,960 Speaker 1: you know, thirty percent of the index, or go straight 481 00:29:53,000 --> 00:29:55,840 Speaker 1: to mss M s c I emerging markets. You have 482 00:29:56,280 --> 00:29:59,920 Speaker 1: ten billion dollars passive inflow overnight to the local stock market, 483 00:30:00,760 --> 00:30:02,680 Speaker 1: You're going to see a bubble there that you know, 484 00:30:02,720 --> 00:30:06,080 Speaker 1: the same, the same type of reaction where foreign investors 485 00:30:06,080 --> 00:30:08,840 Speaker 1: started investing in Russia in the nineties, you know, China 486 00:30:09,040 --> 00:30:12,160 Speaker 1: when it was opening up to foreign investors, Eastern Europe, 487 00:30:12,400 --> 00:30:14,760 Speaker 1: or you know Pakistan in the early two thousands, and 488 00:30:14,800 --> 00:30:18,760 Speaker 1: all those places weren't really nice places when they experienced 489 00:30:18,840 --> 00:30:22,160 Speaker 1: massive bubbles. Right to Russia was corrupted, China was still 490 00:30:22,240 --> 00:30:25,400 Speaker 1: understunctions after Channel mid Square. You know, in Pakistan, someone 491 00:30:25,560 --> 00:30:28,360 Speaker 1: was blowing himself up every second day and there was 492 00:30:28,400 --> 00:30:31,680 Speaker 1: a huge boo market going on. And what what was 493 00:30:31,720 --> 00:30:35,280 Speaker 1: actually similar for all those markets was that they started 494 00:30:35,560 --> 00:30:38,680 Speaker 1: from very low valuations, and this is exactly how it 495 00:30:38,760 --> 00:30:40,200 Speaker 1: is in your run right now. So this is my 496 00:30:40,440 --> 00:30:43,560 Speaker 1: very optimistic scenario long term. At some point um in 497 00:30:43,600 --> 00:30:48,200 Speaker 1: the meantime, it looks as if geo politics could stop 498 00:30:48,240 --> 00:30:51,719 Speaker 1: being a massive head wind, maybe not a tail winket, 499 00:30:51,800 --> 00:30:54,479 Speaker 1: but not not a head wind anymore. And what we 500 00:30:54,520 --> 00:30:56,200 Speaker 1: see at the end of the day, we look at, 501 00:30:56,240 --> 00:30:59,400 Speaker 1: you know, bottom up like micro level numbers, we see 502 00:30:59,440 --> 00:31:02,440 Speaker 1: the continuetion of air new strove and many drivers for 503 00:31:02,680 --> 00:31:05,680 Speaker 1: you know, those U stock prices to continue going higher. 504 00:31:06,320 --> 00:31:09,200 Speaker 1: Magic Woitel. Thank you so much for being with Joe 505 00:31:09,240 --> 00:31:12,640 Speaker 1: and myself. Really interesting discussion. Thank you very much. Yeah, 506 00:31:12,680 --> 00:31:31,719 Speaker 1: that was fascinating. Thank you so Joe. I found that 507 00:31:31,760 --> 00:31:36,160 Speaker 1: conversation really interesting. Uh. I probably still wouldn't invest in 508 00:31:36,200 --> 00:31:39,080 Speaker 1: Iranian stocks for a variety of reasons, not least of 509 00:31:39,120 --> 00:31:41,720 Speaker 1: which the fact that I am a US citizen. But 510 00:31:42,320 --> 00:31:44,400 Speaker 1: one thing that's really interesting is, you know, we talk 511 00:31:44,440 --> 00:31:46,720 Speaker 1: a lot about emerging markets, We talk a lot about 512 00:31:46,800 --> 00:31:50,320 Speaker 1: frontier markets, and the notion that we're sort of seeing 513 00:31:50,720 --> 00:31:53,479 Speaker 1: a vanishing of these frontier markets. A lot of them 514 00:31:53,520 --> 00:31:57,000 Speaker 1: are getting upgraded to e M status as their respective 515 00:31:57,400 --> 00:32:00,920 Speaker 1: economies developed, and here you have of you know, a 516 00:32:01,040 --> 00:32:05,240 Speaker 1: pretty big country, eighty three million people much I said, um, 517 00:32:05,400 --> 00:32:10,760 Speaker 1: lots of resources. Uh. And it's not even on many 518 00:32:10,760 --> 00:32:15,200 Speaker 1: people's radar in terms of investing. No, it's literally not 519 00:32:15,400 --> 00:32:18,760 Speaker 1: on the radar because various data services can't even for 520 00:32:18,840 --> 00:32:22,520 Speaker 1: legal reasons, carried data. But you know, I something that 521 00:32:22,600 --> 00:32:26,360 Speaker 1: I thought a lot about during that conversation is there 522 00:32:26,440 --> 00:32:29,640 Speaker 1: is this notion in finance that there is some sort 523 00:32:29,680 --> 00:32:33,080 Speaker 1: of positive correlation between risk and rewards, so you take 524 00:32:33,120 --> 00:32:36,160 Speaker 1: more risk and you get more reward. It's not actually 525 00:32:36,480 --> 00:32:40,000 Speaker 1: that simple, it's not actually true. So for example, emerging 526 00:32:40,080 --> 00:32:43,800 Speaker 1: markets in general are perceived as riskier than US markets, 527 00:32:43,840 --> 00:32:47,920 Speaker 1: but they've underperformed for the last decade. Basically, small caps 528 00:32:47,960 --> 00:32:52,440 Speaker 1: are ostensibly riskier than large caps, and in theory there 529 00:32:52,440 --> 00:32:56,240 Speaker 1: should be more money in them, but in fact, um, 530 00:32:56,440 --> 00:32:58,840 Speaker 1: you don't. They haven't actually done that well. The missing 531 00:32:58,920 --> 00:33:01,440 Speaker 1: piece and why it does a work, is because what 532 00:33:01,600 --> 00:33:05,760 Speaker 1: actually gives you a reward is not just risk per se, 533 00:33:06,360 --> 00:33:09,920 Speaker 1: but it's sort of like gumption and moxie and going 534 00:33:09,920 --> 00:33:15,479 Speaker 1: out and acquiring information that is too costly for others 535 00:33:15,520 --> 00:33:18,120 Speaker 1: to do. And so when you listen to am talking 536 00:33:18,160 --> 00:33:20,800 Speaker 1: about investing in Iran, It's not just that Iran is 537 00:33:20,960 --> 00:33:22,800 Speaker 1: to me, It's not just that Irond is risky. It's 538 00:33:22,800 --> 00:33:27,200 Speaker 1: like the legal compliance in the lawyer in d C 539 00:33:27,320 --> 00:33:31,320 Speaker 1: explaining how the sanctions work, the figuring out of the 540 00:33:31,360 --> 00:33:34,920 Speaker 1: banks and which banks can actually still transfer money with 541 00:33:35,120 --> 00:33:38,400 Speaker 1: which banks in Europe, the work going to his limited 542 00:33:38,440 --> 00:33:42,440 Speaker 1: partners in Europe and convincing them the that Iran is 543 00:33:42,480 --> 00:33:44,880 Speaker 1: worth investing in. And when you think about the amount 544 00:33:44,880 --> 00:33:47,640 Speaker 1: of like leg work that just that it takes to 545 00:33:47,720 --> 00:33:51,240 Speaker 1: invest in Iran, then you could start to understand whether 546 00:33:51,360 --> 00:33:54,800 Speaker 1: maybe in theory true profit opportunities. Yeah, I mean it 547 00:33:54,880 --> 00:33:58,920 Speaker 1: takes extra effort, that's for sure. You know, in some 548 00:33:59,000 --> 00:34:02,440 Speaker 1: respects it takes access, uh in many ways as well, 549 00:34:02,480 --> 00:34:05,760 Speaker 1: and in the sense that some people just cannot touch 550 00:34:05,880 --> 00:34:09,520 Speaker 1: that market and we lawyers can with a lot of work, 551 00:34:09,560 --> 00:34:12,600 Speaker 1: as as you point out. Yeah, Like so for example, 552 00:34:12,640 --> 00:34:15,440 Speaker 1: if I wanted to invest in Brazil right now, I 553 00:34:15,480 --> 00:34:18,439 Speaker 1: could just log into my brokerage account and I could 554 00:34:18,480 --> 00:34:20,600 Speaker 1: type in the ticker for the Brazil et F and 555 00:34:20,640 --> 00:34:24,240 Speaker 1: it would be as easy, would literally no extra effort 556 00:34:24,719 --> 00:34:27,759 Speaker 1: than uh, you know, investing in the sp five it's 557 00:34:27,800 --> 00:34:29,839 Speaker 1: just changing the three or four letters that I would 558 00:34:29,840 --> 00:34:33,600 Speaker 1: type in my keyboard. It's obviously a totally different story 559 00:34:33,800 --> 00:34:36,359 Speaker 1: when just the mere access to the market is so 560 00:34:36,440 --> 00:34:40,200 Speaker 1: much more cumbersome incommute. You know what, I really want 561 00:34:40,200 --> 00:34:45,760 Speaker 1: to see that Iranian Bloomberg esque data service. I'm really 562 00:34:45,800 --> 00:34:49,000 Speaker 1: curious about that one, and I'm gonna go check that 563 00:34:49,000 --> 00:34:50,759 Speaker 1: out right after. We're gonna have to look it up. 564 00:34:51,360 --> 00:34:54,440 Speaker 1: This has been another edition of the Odd Thoughts podcast. 565 00:34:54,520 --> 00:34:57,040 Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at 566 00:34:57,080 --> 00:35:00,040 Speaker 1: Tracy Alloway and I'm Joe Why Isn't All You? And 567 00:35:00,200 --> 00:35:03,640 Speaker 1: follow me on Twitter at the Stalwart. And you should 568 00:35:03,680 --> 00:35:07,279 Speaker 1: follow our guest mache Voitel on Twitter. His handle is 569 00:35:07,440 --> 00:35:12,319 Speaker 1: at m w o j t a l so, uh 570 00:35:12,760 --> 00:35:15,760 Speaker 1: check his stuff out there, and be sure to follow 571 00:35:15,960 --> 00:35:20,239 Speaker 1: our producer on Twitter, Laura Carlson. She's at Laura M. Carlson. 572 00:35:20,600 --> 00:35:24,799 Speaker 1: Follow all the Bloomberg podcasts on Twitter at Podcasts, and 573 00:35:25,040 --> 00:35:30,600 Speaker 1: follow the Bloomberg head of podcast, Francesca Levy at Francesca Today. 574 00:35:30,600 --> 00:35:31,400 Speaker 1: Thanks for listening.