Posted on 11/22/2005 5:06:20 PM PST by Stultis
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Despite bombs, Baghdad stock exchange thinks big
22 Nov 2005 12:25:03 GMT Source: Reuters |
BAGHDAD, Nov 22 (Reuters) - Bomb blasts around Baghdad routinely shake the trading room and it takes 10 days for an investor to receive proof of a stock order, but Iraq's fledgling stock exchange is thinking big.
Operating out of a heavily protected building in a residential sidestreet, the Iraqi Stock Exchange's 50 brokers write up their prices on white boards but there are plans to introduce electronic trading by next summer.
Despite the technological challenge of running a virtual exchange in a country ravaged by daily bombs, officials want floor trading eliminated partly because of the risks of attack.
"If I had all my brokers on one floor, I could take out an entire market with one incident," said a U.S. official advising the exchange.
After shuttling around Baghdad looking for a home, the exchange moved from a hotel to a permanent base this month, across the street from a church in a Christian neighbourhood.
The constant threat of attacks from insurgents hangs over the exchange, which is protected by concrete blast walls and security guards toting guns.
"I keep checking on the building even when I'm at home, I'm always in touch with security by phone and I sometimes even go back to the exchange at midnight," says exchange CEO Taha Ahmed Abdul Salam.
EXPANSION PLANS
However, compared to the problems that have dogged the country's oil production -- its main hope for reviving a faltering economy -- the stock exchange appears to be a relative success story.
Trading is limited to two-hour sessions twice a week, but there are plans for five hours of trading five days a week once it is fully automated.
About 85 companies are listed -- including names like Mesopotamia Investment and Baghdad Soft Drinks -- a figure Salam hopes will climb to at least 100 by the end of the year.
An average of 700 million shares change hands each day, adding up to a daily volume of about 2 to 3 billion Iraqi dinars. That equates to $1.4 million to $2 million -- compared to about $70 billion a day on the New York Stock Exchange -- making Iraq's bourse among the world's smallest.
As for where the index has gone since they began properly registering activity in November last year, Salam isn't sure, but he reckons it's gone up by about 70 percent.
Electronic trading would connect the market to Iraq's central bank and clearing banks through a wireless area network.
Once the market is automated, Salam also hopes many of Iraq's state-owned companies will be privatised and allowed to float, greatly boosting the market's capitalisation.
U.S. and Iraqi officials are hoping a law barring foreigners from trading will be revoked once a new government is elected in December, a move that could help draw in foreign investment.
The success of such a move depends on whether any foreigners are willing to stomach the risk of investing in a country with a raging insurgency and little political stability.
Exchange head Salam remains defiant.
"We know there are some dangers, but we don't have any alternatives," said Salam. "The Iraqis have to do business."
"However, compared to the problems that have dogged the country's oil production -- its main hope for reviving a faltering economy -- the stock exchange appears to be a relative success story. "
More untold Iraqi success stories.
"adding up to a daily volume of about 2 to 3 billion Iraqi dinars."
I wonder if the Dinar will survive -- or if a new currency will be issued in Iraq within the next year or two.
Risky as it might be, if they change the laws I'd be happy to consider at least a small investment in some of their more stable firms as a vote of confidence.
Hope others would as well.
I and others poured our money into US stocks after 9/11, and it was not only a good investment personally, but a patriotic move that seemed to stabalize the economic damages. Iraq could use such support in these trying times.
I'm wishing I'd put money into the Kuwaiti stock market before the war. (I probably didn't have enough of a nut to do it anyway, so I never actually looked into it. But I thought about it being a good idea.)
BTTT
:)
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