The Iraq Stock Exchange (ISX) was established on April 18, 2004. It began trading shortly thereafter on June 24, 2004 with 15 companies listed. Prior to the ISX and under Saddam Hussein, the Baghdad Stock Exchange was the country’s bourse. However, there is no link between the two exchanges and the ISX makes clear that it is a legally separate entity and not responsible for any of the earlier exchange’s liabilities.
In the post-Saddam era, the new ISX has been steadily growing. It currently lists almost 90 companies in the banking, agriculture, insurance, investment, services, manufacturing, and tourism. It’s most active trading sector is banking. It opened with strictly manual trading, but has been accepting electronic trades since 2009. The ISX trades in the Iraqi currency, but has allowed foreign investors since 2007.
The ISX is managed by a Board of Governors and its oversight is handled by the Iraq Securities Commission. It’s located in Baghdad. There are almost 50 brokerages licensed to trade on the ISX. By 2011, the ISX had a daily turnover of around $2 million and an overall market capitalization of $4 billion. That makes it one of the smaller exchanges, even in its own neighborhood. It only actively trades around 30-40 of its listed stocks. Even so, the ISX has proven to be relatively stable, showing consistent growth. The International Monetary Fund is forecasting strong economic growth for Iraq in 2012 at more than 12 percent, which portends further growth for the ISX.
Recent Growth: 2011 over 2010
Over the course of 2011, the average daily trading volume was valued in Iraq money as more than four billion Iraqi dinar. The ISX also showed increases in a number of other key metrics.
– The total trading volume in 2011 was valued at 940 billion Iraqi dinar. This represents an increase of 135 percent over the trading volume seen in 2010, when the total trading volume was valued in Iraqi currency at 400 billion dinars.
– Over 490 billion shares were traded on the ISX in 2011, while it traded 255 billion shares in 2010, an increase of over 92 percent.
– The market value of shares listed in the ISX hit 4.9 trillion dinars, a 43 percent increase over the high of 3.4 trillion dinars in 2010.
– It’s index showed an almost 35 percent increase and rose from 100.98 points in 2010 to 136.03 points in 2011.
– The number of actual contracts completed rose 85 percent in 2011, jumping from 71,722 such contracts in 2010 to 132,574 in 2011.
– Foreign investment in the ISX jumped from almost 63 billion dinars in 2010 to 176 billion dinars in 2011, an increase of 184 percent.
Future of the ISX
The overall number of actively traded stocks is expected to grow, improving the stability and diversity of the ISX. There are some fears of how an expected devaluation of Iraq money will impact the ISX, but some economists feel those fears are overblown.
Foreign investment in the ISX continues to grow, even though the open market is skeptical as to the accuracy of the ISX’s index in representing the strength and value of its market.
There are also hopes that some major Iraqi companies, particularly in the energy and oil sectors, that aren’t currently listed on the Iraq Stock Exchange will soon join it.