Challenges of Foreign Portfolio Investment due to the Implementation of General Policies of Article (44)

In the new situation of global economy, foreign investment plays a major role in economic development. Most of discussions focus on what kind of investment is useful for Iranian economy and how can we attract foreign investment? Foreign investors, especially transnational companies are interested in investing in advantageous regions to make more profits and competitive condition. According to studies, the main reason for much Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) can be many factors such as legal factors and economic policy making, economic structure factors, supportive and motivating factors and geographical and political factors.Studies show that market and prices manipulation are main challenges facing capital market. Unvarying financial instruments, the dominance of Iranian banking network over the market, few accepted investment companies in portfolio, lack of electronic network expansion into thecapital market, public administration, and newer establishment of stock exchange association than Iranian banking system, many ambiguities in the second phase of Justice Shares supply and demand furthermore how these shares are granted are known as other main challenges facing capital market and the implementation of Article (44). The paper discusses these challenges and provides strategies to remove them.