Iraqi Economy & Market Analysis

[HJS]

I have started this and removed previous posts from Blake's thread as I started to go into the economy etc a little more than I was concentrating on actual shares and stock choices.

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At the moment, I have over 300 pages of info to read.

Two of the main things I will be reading are:-

Baghdad Stock Exchange (June 2003), this contains info on many companies. Their turnover, assets, profit margin etc etc.

Iraq - Economic Review & Prospects II (Jan 2004), I've only had a chance to flick through this one so far. It seems to be a broader view of Iraq's situation with regard to oil, electrical supply etc etc.

The one thing I would say to look out for is dates. Before the numerous wars Iraq fought, it was the WORLDS BIGGEST dates producer. It has fertile land and (can have) a good water source (from the rivers I believe).

The one thing that will hold Iraq's Economy back A LOT will be debt. They will continue to struggle for decades unless some of the debt it written off. With the help of the USA, they may achieve around 65% write off. This alone should boost the Dinar. However, if you want to help, see my sig below.

Once I've read these docs, I will post again and give my (then more educated) choices. With any luck, I'll have already bought into them too.

Regards,
HJS.
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:happy64:

[HJS]

Most of this information is not up to date. The most currency document (of significance) I have is dated Jan 2004 (as per previous post).

Disclaimer: None of this information is intended as investment advice whether implied or not. These and subsequent posts, are my understanding of the documents that I have read and current world affairs and market sentiment. You are advised (as with any investments decisions) to DYOR (do you own research).

Okay, so I'll start with a brief background of the ISX:-

It was founded in 1991 and commenced operations in March 1992. It is a self financing, non-profit organisation and employed 79 people in 2000. Below is a table that shows the number of companies listed from 1992 onwards, number of trading sessions on the ISX and other little tit-bits.

http://img90.exs.cx/img90/5977/EquityTradeStatistics.jpg



Below is a table showing the different sectors of the ISX and their performance. ALL sectors show an increase in aggregated net profit in 2001 over 2000.

http://img90.exs.cx/img90/6144/SectorPerformance2000-2001.jpg


Iraq has significant limestone reserves, which makes Iraq a competitive, low cost producer of cement. Before the first Gulf War, Iraq produced 8.2 million tones per annum, some of which was exported. The total production in 2000 was 4.3 million tones. This could prove to be a good investment, cement prices have gone up with China currently buying as much cement, oil and power as possible.

After all, even if they do not export as much as pre-war years, there will still be a huge demand for it within Iraq itself. I would expect this demand to last a number of years. Personally, I would say for the next 5-10 the demand within Iraq alone will be huge.

[HJS]

Forecasts for 2003 through to 2006.

There are a number of interesting things. According to the second table below (Table3: Budget Financing for 2003 to 2006), there shows a Oil-for-food Program Refund totalling 3,345 billion Dinars or $2,291,095,890 USD.

2,025 billion Dinars or $1,386,986,301 USD in 2003 (which I will assume has been refunded).
900 billion Dinars or $616,438,356 in 2004 (which I will assume has/is being refunded).
420 billion Dinars or $287,671,232 which is yet to be refunded.


Also, another thing to look at is the Budget Surplus/Deficit. If you are not familiar with reading financial summaries, the numbers in brackets represent a negative figure. So, according to the second table down (Again, Table3: Budget Financing for 2003 to 2006) It goes from a deficit/loss of 4,636.2 billion Iraqi Dinars or $3,175,479,452 USD in 2003 to a Surplus of 19,3 billion Iraqi Dinars or $13,219,178 in 2005 (only a year away). Whilst this is not a huge figure (especially compared to the 2003 deficit), it does show some exceptional (expected) progress of the economy.

NOTE: The figures are calculated based on the a conversion rate of $1 USD to 1,460 Iraqi Dinars and using the US version of a billion (1,000,000,000) as apposed to the UK version (1,000,000,000,000) which is 1,000 times more !!!!!!!!

http://img20.exs.cx/img20/1600/BudgetAggregates2003-2006.jpg

http://img20.exs.cx/img20/3392/BudgetFinancing2003-2006.jpg

[BRYAN]

http://www.isx-iq.net/page/daily-bulletin.htm

[HJS]

Sorry for the delay. I've had to go out partying as my friends have come back from a four month break abroad. :D

So, here I go..........

Population & Labour Force

Total population in 2002 is an estimated 24 million people, growing at a circa 2.8% annually. This places Iraq in the world's high growth rate countries. As with many developing countries, a large proportion of the population are young, around 41% are under 14. It is estimated that the labour force in Iraq in 1999 was 6.3 million.


Agriculture

Iraq has abundant resources of land and water making agriculture of the largest sectors of Iraq's economy. According to the Food and Agriculture Organisation of the United Nations, there are 43.4 million hectares (or 107.24 million acres) of land for cultivation. This accounts for around 27 of Iraqi's land. Of this land, it is estimated that 50% is fed by rain while the remaining 50% is irrigable.

There has been little/no progress over the years in the agricultural sector, this is a result of a lack of machinery, water shortages and low technology uptake. Of course this is mostly, if not all as a result of the sanctions and the Saddam regime.

Below is a table that shows year on year production and growth from 1990 onwards.

http://img72.exs.cx/img72/8779/AgriculturalOurputandTrends1990-2002.jpg

[HJS]

Note: Billion and Trillion refer to the American calculation.
1 billion = 1,000,000,000
1 trillion = 1,000,000,000,000


Oil & Gas

Iraqi has proven oil reserves of 112 billion barrels, however this is with the majority of Iraq not explored. It is believed that Iraq may well have the world's largest oil reserves. Of the 73 discovered fields, only 15 have been developed.

Iraq also has an estimated 110 trillion cubic feet of natural gas, the world's tenth largest reserve.

Oil & gas are the key to the recovery of the Iraqi economy and making Iraq a Middle Eastern leader, as in the days before the Iraq/Iran war.

Prior to the recent invasion, Iraq was able to produce around 2.6 million b/d (barrels per day). It is estimated that domestic consumption was approximately 400,000 b/d leaving a huge amount available for export. Iraq's peak oil production was in 1979 when it managed to produce 3.5 million b/d.

Below is a table showing production during 2003.

http://img11.exs.cx/img11/5967/2003OilProduction.jpg


Iraqi oil production has been hampered by a number of things. Since the invasion, it has been looting and sabotage and general lack of security in Iraq. Prior to that it was years of poor reservoir managements, corrosion problems, deterioration of water injection facilities, lack of spare parts, materials, equipment, damage to oil storage and pumping facilities to name a few.

Around 70% of Iraqi gas reserves lie within the oil fields, therefore, any increase in efforts to produce oil should have a direct impact on the gas production too.

During 2001 Iraq produced 97 billion cubic feet of gas compared to 700 billion in 1979.

The one thing to note is that whilst oil & gas resources are limited and even being depleted, our use and demand of them continues to grow. I've yet to see mass produced or mass used vehicles that do not run from petrol. Whilst many people expect oil prices to drop, it is all speculation. OPEC are talking of a target of around 30 USD p/b. Whilst an increase in Iraqi oil production might help alleviate any temporary shortage of supply, I personally can't see oil going anywhere but up over the next 10 or 20 years.

[Y NOT]

I think your 1 trillion = 100,000,000,000 is missing a zero

[HJS]

I think your 1 trillion = 100,000,000,000 is missing a zero

Yes, you are correct. I have now edited.

Thanks,
HJS.

[HJS]

Telecommunications

Needless to say that telecommunications in Iraq are poor due to the damage suffered during the first and second Gulf Wars, along with a sever lack of maintenance, parts and general technological advancements.

Iraq has 316 telephone exchanges, of which 38 are in Baghdad. 12 of these 38 were damaged during the war.

Prior to the recent invasion, there were approximately 1.24 million lines, this (at the start of 2004) was down to 0.94 million due to damages during conflict.

The market penetration is therefore, around 3.9% of the population (0.94/24*100).

There are over 2 million people waiting to have access, these people alone would bring the market penetration up to around 12.3%. It is expected that the numbers will increase along with the improvement of the economy and general standard of living.

Internet access is very limited, and mainly in Baghdad. Unfortunately I do not have much information on this at all, I doubt that there is that much out there.

On the 6th of October 2003, The Ministry of Communications announced that Orascom, Asia Cell and Al-atheer won bids for licences in Iraq.

Orascom was selected to offer GSM in Baghdad and the Diyala and Al-Anbar provinces. Asia Cell have been offered the north of Iraq. Al-atheer have been offered the south of Iraq.

A market penetration of around 4% is expected over the next two years. Motorola has been chosen as the main supplier of GSM base stations and transmission equipment for Baghdad and the central region over the next two years.

[IQDFiend]

This is all great info!!

One simple question hopefully someone in here can answer... I am trying to find the floats for the currently trading companies so I can do some basic analysis, using some of this older data. I have searched high and low, but no numbers seem to be out there. Anyone here have any ideas?

IQD