2013/03/11 (01: 00) - hits: 16 - count (2747)

The stock market and the challenges of increasing funding needs

Dr. accustomed Naji al-Hamdani

The stock market in Iraq is of great importance in the light of the challenges facing the Iraqi economy growing financing needs. The establishment and development of a market development of domestic financial sectors and stimulating investment activities and financial markets. According to the financial market, the Iraq market for securities market with financial and administrative autonomy runs its Board of Governors from different segments of the investment sector.

Iraq has created a market for securities or stock exchange Baghdad in 1991 as a response to conditions in the international embargo as a process of structural transformation in the economy towards the private sector. As a Government run by the Iraqi Ministry of Finance has absorbed during the period 1992-2003 some 113 Iraqi company of the mixed and private shareholding companies and an annual circulation of more than $17 million.

In line with the new situation in Iraq that emerged after 2003 and to focus attention on the role of the private sector and economic deregulation and opening up to the outside world and then cancel the Baghdad stock exchange market and the Iraq market was established for securities on behalf of the Iraq Securities Commission along the lines of American securities by law 74 of 2004. According to the two institutions created Iraq market for securities and securities which have become independent since 2005 and is the only stock exchange in Iraq.

The stock market is a market for the purchase and sale of securities and investors in this market will periodically Exchange becomes a tool to regulate the supply and demand for different stock. Securities include bonds issued by the Government of Iraq or the services and facilities of the State sector and remittances from the Treasury and corporate bonds shares participating Iraqi and any securities Iraqi or non-Iraqi does not contravene the regulations that are being dealt with.

And since 2004 the Iraq market for securities with financial and administrative autonomy as a market for the investment sector plays the role of collecting savings from individuals, institutions and sectors and works on development for employment.

And until April 2012 the number of companies listed on the Iraq stock exchange more than 100 companies from the sectors banks, insurance companies, industrial companies and agricultural investment and tourism and hotels and Baghdad soft drinks co, Iraqi company for carpets and furnishings.

The goal of establishing Iraq market for securities attract foreign investment and create an investment climate for Iraqi and non-Iraqi investors to buy and sell shares on the stock exchange.

The banking sector was the most active sector in terms of size and number of shares traded and several industry and the hotel industry still traded shares prices best prices compared with the rest of the shares traded.

The securities are long-term credit instruments including stocks, bonds, stock ownership rights are therefore shareholders are partners in capital and thus don't get interest but profit or bear losses depending on the financial status of the project that issued these shares.

As bonds are credit instruments issued by Governments or projects and subscribers in these bonds are not partners in the capital but only creditors and receive interest at a fixed rate fixed in advance in the financial market.

And conclude that security is an instrument that ensures the bearer the right to yield and guarantees the right to part of the facility.

To attract investors and ensure the continuity of the flow of funds looking for investment and financial institutions able to absorb these funds and lucrative investments in the capital market requirements. Show the importance of intermediaries as a bridge between lenders and borrowers are people persons. The stock market is of great importance in investment activity, the borrower's credit is a medium-and long-term and provide guarantee for the investment of its funds and profit-thus providing a fertile environment for investment and stimulate the movement of capital and give a strong impetus to the activity of private enterprise, and thus contribute to support economic activity.

The market also aims to organize and train members and listed companies in their lists in a way that promotes the continuous market confidence and protect their interests and working to organize and simplify securities trading in an orderly manner, including clearing and settlement operations and everything related to the process of buying and selling securities, and provide them with free and open markets based on a system of public bidding and closer links and relations with international securities markets, regional and Arabic in order to develop the Iraqi market and to enhance their role in supporting economic growth.

To activate work in Iraq market for securities and give a strong impetus to attract more continuous setting requires journals and weekly, monthly and yearly stock market activity and decisions of the Board and clarify data on trading volumes and price indices and post them on the Internet for investors and help them see the investment opportunities available and encourage them to take advantage of them.

We believe it is important that the focus Iraq market for securities:

1. Regulation and supervision of securities trading and dealt with to ensure the safety and health of this deal and ease, speed and accuracy to protect the national economy and the interest of investors.

2. organizing the profession of intermediaries in the Securities and defining the rights and obligations of the parties concerned and the ways to protect their legitimate interests.

3. development of savings and develop investment awareness by encouraging investment in securities, and directing the savings to serve the national economy.

4. collection of statistics and information analysis and dissemination to achieve the desired goals of securities.

5. links and links with Arabic and stock markets and take advantage of methods to deal with what helps develop Iraq market for securities.

To improve performance in Iraq stock exchange market after 2003 have taken important measures such as the establishment of a body to control securities and monitoring business brokers and stock information and trading in accordance with supply and demand, it is unlikely that prevailed in the Baghdad stock market in the period 1992-2003 in which trading in accordance with the rates determined by the Ministry of finance and is a minimum of 5% and 10%. As an upper limit.

And the negatives facing the Iraq market for securities and reduce its role in stimulating many Iraqi financial market including:

1. the current political crisis and the confused security situation will lead to frustration and aspirations of companies active in maximizing profits and lead to a decline in shares of joint-stock companies.

2. the illegal practices of financial intermediaries have led and lead to leakage of large amounts of foreign exchange abroad, significant damage to Iraq's wealth.

3. rumours and propaganda by intermediaries or financial gains to investors affect the stability of the stock market and the stock in case of oscillation between rise and fall.

4. low awareness among the majority of investors and lack of knowledge of how to stock trading in the financial market which requires more guidance, direction and insight into the mechanisms of the stock market.

And to stimulate and expand the Iraq market activity of securities we suggest:

1. create a fertile environment for attracting investors and international mediators to the Iraqi market, in line with the regulations of the Iraq market for securities.

2. establishing relationships and links between the Iraq market for securities and international stock markets, especially in New York and Tokyo Stock Exchange and the London Stock Exchange and benefit from their experiences.

3. encourage entry into banking institutions and foreign brokerage firms for market expansion and increased cash flows.

4. develop information programmes to educate investors and public investment advantages such as seminars and international conferences or local to identify companies and institutions the importance of investing in the stock market,

5. issue of some foreign currency bonds to attract foreign capital and issuance of bonds convertible into shares if the bearer's desire.

We believe that the instability in Iraq market for securities is due to a variety of reasons and factors, including capital flight abroad and national banks to absorb large amounts of cash flows which had led to the formation of large cash wefrat out productive investment. The weakness of the Iraqi economy and investment movement adversely affect the stability of the stock index.

On the positive side in the Iraqi stock exchange, Iraq stock exchange not linked to the global economy has led to protection of foreign funds destined for Iraqi stock exchange from the effects of the international financial crisis.