Posted: 7/12/2009 8:51:01 PM EDT
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Despite gloom, Baghdad’s bourse is booming as violence eases
Zawya Dow Jones/Baghdad Baghdad’s bourse is regarded as one of the few postwar success stories in the country. After being closed for 14 months following the US-led war on Iraq in March 2003, the market started its postwar operation in a hotel with the help of US troops Stock markets across the globe may be facing gloomy times but the Baghdad bourse is booming as investors cash in on improved security in Iraq and the introduction of electronic trading. After years of closure and lack of investor interest, traders are returning to the Iraq stock exchange and the latest session this week, on Tuesday, was a good one, said Ali Wahab, the head of Iraq’s Ukaz brokerage. “So far, more than 100 deals were concluded, trading with 600mn shares,” Wahab told Zawya Dow Jones during Tuesday’s session. The total value of the shares traded stood at around 1.2bn Iraqi dinars ($1mn), he said. At first glimpse, things don’t look much different from other bourses - traders’ eyes are fixed on electronic screens to follow share price movements, while in an adjacent room, stockbrokers are sitting in computer booths, selling and buying shares for their customers. Outside, the situation is different. Located in the center of Iraq’s capital, the Baghdad stock exchange is heavily protected for fear of attacks - explosions still rock the capital from time to time, although much less than two years ago. Each Sunday, Tuesday and Thursday, the Baghdad bourse opens for trading, with sessions lasting two-and-a-half hours starting at 10am local time. Baghdad’s bourse is regarded as one of the few postwar success stories in the country. After being closed for 14 months following the US-led war on Iraq in March 2003, the market started its postwar operation in a hotel with the help of US troops. In November 2005, the exchange moved to its current, spacious high-tech building. Although trading volume has increased, Baghdad’s bourse is still tiny when compared to other regional exchanges. The bourse’s market capitalisation totals just above $2bn, compared with about $273bn for Saudi Arabia’s Tadawul, the Middle East’s largest bourse, according to Zawya.com. The Baghdad exchange also lacks diversity. According to the bourse’s June monthly report, shares of the three largest private banks accounted for 90.41% of the trading volume in that month. Hotel shares accounted for 9.59% of the volume. Recent developments are still an improvement on the worst days of the sectarian conflict that gripped the country between 2005 and 2007, when Iraqi share prices were completely wiped out, said Jimmy Effem Toma, the exchange manager. At the time, many investors sold their shares and fled to neighbouring countries such as Jordan, Syria and the UAE, and trading was suspended for several months in 2006. Violence has since fallen to its lowest level, encouraging investors to return back to the bourse. In 2008, the market index jumped to 56 points from 25 points in 2006. “They are returning back and they are buying shares, which makes demand for shares rise,” said Lubna Anwar, a stockbroker. The market’s general index is up by about 30% this year so far and is expected to improve further when all of the 91 companies listed in the bourse start electronic trading. “Now only 26 companies trade electronically,” Toma said, adding that the other companies will move over during the course of the year. By the end of 2009, all listed companies should have started electronic trading, she added. Traders expect the new system to boost prices, which are still recovering from their earlier collapse. The most expensive stock costs 100 dinar ($0.09) and the cheapest half a dinar - a fraction of a cent. “Prices of shares were up when the electronic trading started on April 19,” Toma said. Foreign companies have also started buying and selling stocks at the bourse, Toma added, although she declined to name them. The number of foreign investors is expected to rise once all companies join the electronic trading. |