putting stock in iraq

Putting Stock in Iraq


Baghdad -- Though barely over 30, Ahmad Walid al-Said has already become the biggest of the hotshots on the noisy floor of the Iraqi Stock Exchange.

As head broker at al-Fawz Co.,
one of the country's most respected brokerages, and chairman of the Iraqi Association of Securities, he eats, drinks and sleeps the stock market, even when he's not roaming the floor and putting through orders.

"After I finish all this, we go to lunch," he says after the close of the session. "During lunch, we talk about what we're going (to) do the next session. We can't talk about anything but the stock market all day long."

This is one place in Iraq where go-getters are abundant and no one is waiting for a handout. Unlike much of the rest of Iraq, the men -- and a considerable number of women -- who ply their trade here live by a bootstraps philosophy, eagerly profiting from an equities market where daily trading volume has grown twelvefold since Saddam Hussein's fall.

The stock exchange, which opened in July, may be one of Iraq's few success stories. But it is also tiny enough to fit temporarily inside a small whitewashed building on a Baghdad side street. The trading floor is open only five hours a week, 10 a.m. to 12:30 p.m. Monday and Wednesday.

Market value, or capitalization, totals about $1.5 billion, compared with $116 billion for Istanbul's stock exchange, $44 billion for the Tehran Stock Exchange in neighboring Iran, and $3 billion for the exchange in neighboring Jordan, which has one-fifth of Iraq's population.

And though trading volume has grown since the previous regime, it totals only about $6 million a day, less than the tiny Palestine Securities Exchange in the West Bank city of Nablus, according to the Web site of the Federation of Euro-Asian Stock Exchanges.

But the Iraqi government recently said it plans to let foreigners get a piece of its stock market, and though no details have been released, the announcement has created a stir among the 10,000 or so individual and corporate investors who trade in Baghdad.

The exchange moved to its current quarters in January and is expected to move to a more spacious high-tech building by year's end, says Jimmy Effem Toma, the exchange manager, who, despite her masculine first name, is a no- nonsense woman who dons a bright pink blouse and works the floor relentlessly during trading hours.

On a recent trading day, the exchange whirled with frenetic activity, brokers taking calls on cell phones and shouting out orders to their deputies over the long room's din.

Some investors sat watching the action from a gallery behind the trading floor. "It's a hobby of mine," says Safa al-Ani, a 50-year-old university professor who dabbles in the markets. "Over the years, I've won more than I've lost, but just being here is a pleasure."

The 87 companies listed on the exchange include some of the hottest names in Iraqi business. There are Baghdad Soda, Hader Marble and Thesar Agriculture. Dar al Salaam Insurance is trading at 3 dinars per share, while Basrah Bank is at 5 dinars and the Palestine Hotel, where many journalists live, trades at 95 dinars.

Investors, brokers and exchange officials agree that financial services companies are getting the most play, boosted by laws that permit foreign companies to buy chunks of Iraqi banks. New rules also require banks to quintuple their reserves over the next few years, forcing them to partner with foreign banks. Already, banks in Jordan and Kuwait have bought up pieces of private Iraqi banks.

Orders come to brokers via telephone or e-mail. But the technology gets decidedly low-tech from there. Each of the 87 companies listed on the exchange has its own white board. The exchange's 58 employees update bid and ask prices with erasable marking pens.

"We plan to turn it into automatic (electronic) trading," says Talib Tabatabai, chairman of the stock exchange's board of governors, who was educated at Florida State University. "But this will take time."

Iraq has had a stock market for decades. Before the war, it was called the Baghdad Stock Exchange and was operated by the Ministry of Finance. Now it is a self-regulated organization like the New York Stock Exchange, owned by the 50 or so member brokerages.

Iraq's equities business has always been a small affair where brokers, investors, company officials and exchange employees all know each other. That may sound like a recipe for the kind of insider trading scandal that felled Martha Stewart. Tabatabai concedes that the stock exchange lacks individual investor safeguards taken for granted in the West. But he says they're not needed.

"We in Iraq still maintain a high level of decency," said Tabatabai. "We have never had fraud. We still live by honor."