Iran and Saudi Arabia are clamoring for position as international investors are shifting their attention to the Middle East for emerging markets.

The two countries are seen as aptly positioned to rejuvenate the sector which has lately lost favor among investors.

Both countries are hugely rich in hydrocarbon reserves and are being closely watched by analysts and portfolio managers.

“In the Middle East right now, there is a pretty active discussion about Iran,” Leo Grohowski, chief investment officer at BNY Mellon Wealth Management, has told Private Wealth which is published by Charter Financial Publishing Network.

“If a nuclear agreement is reached, which will allow Iran to trade oil and better re-engage with the international community ... it could become a heavy weight,” he said.

The nuclear pact is actually one of two upcoming changes that analysts say could significantly shift the investing landscape in the Middle East and create opportunities for investors.

The other milestone is the planned June 15th opening of the Saudi Arabia stock market to non-residents, which is expected to stimulate growth for both Saudi Arabia and its neighbors.

Oliver Bell's Africa, Middle East and Frontier Team, sees Iran as having a more diversified economy than Saudi Arabia. Iran is also less oil dependant, he added.

His team sees the importance of oil to Iran as essentially equivalent to Canada's. Unlike many Emerging Market Frontier countries, he noted, Iran is “not plagued by massive public debt”.

Government expenses are about 15% of GDP in Iran, which could enact pro-business reforms under the direction of President Hassan Rouhani, he said, adding that the reforms could attract foreign businesses to the nation.

Bell also sees Iran as a “very attractive market” due to a large, liquid market that is supported by an educated population and a workforce that is half comprised of women, he said.

Iran has a population of around 80 million and a GDP of $419 billion, he noted, and a market-cap size of $170 billion.

Bell's team also is impressed by the Saudi stock market's $445 billion market cap and liquidity; it trades up to $4 billion a day. Like Iran, Saudi Arabia also has a young population, with 50% under 20 years old, Bell said.

A group of European investors will be visiting Tehran in a few weeks to assess opportunities in the Middle East’s second largest economy.

They are being represented by London-based boutique investment bank First Frontier on their first visit to Iran

following “a year’s worth of laying the groundwork for investment into Iran”.

HB/HB