Slow start for ISX in year 2005
After an end-of-year two weeks break , trade in Iraqi stocks and shares resumed to a slow start today in a new make-shift temporary premises of the Iraq stock exchange. The opening of the ISX in 2005 was delayed for one week as construction workers wrestled to make necessary alterations to an old building few meters away from the headquarters of the Middle East Bank, to temporarily house the ISX for couple of months.
According to some reports the ISX had to find alternative accommodation because the short term lease of its previous quarters, arranged by the defunct Coalition Provisional Authority, CPA, expired at the end of 2004. The ISX is expected to move in June to brand new permanent headquarters which it recently bought for just under $2 million.
Trade volume was abysmal at ID500 million, a mere $0.3 million. Reasons for the poor performance are not hard to find. Many listed companies remain closed for trade on account of business to do with annual general meetings.
Trade by non-Iraqis is still barred despite the go ahead given by the Trade Ministry and the Central Bank of Iraq. The Securities Commission seems to be still undecided. Some reports speak of strong opposition for liberalizing the financial markets by the Ministry of Planning and Development Cooperation (economy ministry). The ministry is said to argue that foreign investment must be under strict control. Financial investment in the ISX cannot practically be controlled and there lies the opposition.
Trade in the ISX remains manual. Brokers assemble over small white boards, one for each listed company, where they scribble their bids and asks. The CPA promise to deliver an automated trading system came to nothing. Sources say that the US Embassy is shouldering this task now. Realistically speaking one would not expect such a system to be up and running not for another six months if all goes well. Electronic trading could give tremendous boost to activities of the ISX including trade volume.
The ISX of course sits in the heart of the capital market of Iraq. Its role will be vital when tens of state owned enterprises are corporatized and sold off to the private sector. It provides the necessary market place where privatization can be carried out in an efficient and transparent manner. The ISX will witness a tremendous boost when the process of privatization takes off, hopefully in 2005 after a government, liberally minded hopefully, is elected January 2005. Such a government may overrule objections to foreign investment now voiced by the old guard.
Meantime and until such good times when economic reform gets underway, business in the ISX will remain minimal with small turnover and limited trade activities.