Iraqi Stock Exchange trading on a promise

Market volume soars since Saddam era =

Monday, April 18, 2005

BY BORZOU DARAGAHI

For the Star-Ledger

BAGHDAD -- Though barely over 30, Ahmad Walid al-Said has = already=20 become the biggest of the hotshots on the noisy floor of the Iraqi = Stock=20 Exchange.

As head broker at al-Fawz Company, one of the country's most = respected=20 brokerages, and chairman of the Iraqi Association of Securities, = he=20 sleeps, drinks and eats the stock market, even when he's not = roaming the=20 floor and putting through orders.

=20

"After I finish all this, we go to lunch," he says after the = close of=20 the session. "During lunch we talk about what we're going do the = next=20 session. We can't talk about anything but the stock market, all = day long."=20

Welcome to the one place in Iraq where go-getters are abundant = and no=20 one is waiting for a handout. Unlike much of the rest of Iraq, the = men and=20 considerable number of women who ply their trade here live by a = bootstraps=20 philosophy, eagerly profiting from an equities market where daily = trading=20 volume has grown twelvefoldsince Saddam Hussein's era.

The stock exchange may be one of post-war Iraq's few success = stories,=20 with its expanding trading volume and increased market = capitalization.=20

But it's also tiny enough to fit temporarily inside a small = whitewashed=20 building on a Baghdad side street.

The trading floor is open only five hours a week, 10 a.m. to = 12:30 p.m.=20 Mondays and Wednesdays.

Market value or "capitalization" totals about $1.5 billion, = compared=20 with $116 billion for the Turkish stock exchange in Istanbul, $44 = billion=20 for the Tehran stock exchange in neighboring Iran, and $3 billion = for the=20 exchange in neighboring Jordan, which has one-fifth of Iraq's = population.=20

And though trading volume has grown since the previous regime, = it=20 totals only about $6 million a day, less than the tiny Palestine=20 Securities Exchange in the West Bank city of Nablus, according to = the Web=20 site of the Federation of Euro-Asian Stock Exchanges.

But the Iraqi government recently announced plans to let = foreigners get=20 a piece of the stock market, and that has created a bit of a stir = among=20 10,000 or so individual and corporate investors who trade here. =

The exchange moved to its current digs in January, and will = likely move=20 to a more spacious high-tech building by year's end, says Jimmy = Effem=20 Toma, the exchange manager, who despite her masculine first name, = is a=20 no-nonsense woman who dons a bright pink blouse and scours the = floor=20 relentlessly during trading hours.

On a recent trading day, the exchange whirled with frenetic = activity,=20 brokers taking calls on cell phones and shouting orders to their = deputies=20 over the long room's deafening din.

Some investors sit watching the action from a gallery behind = the=20 trading floor.

"It's a hobby of mine," says Safa al-Ani, a 50-year-old = university=20 professor who dabbles in the markets. "Over the years, I've won = more than=20 I've lost, but just being here is a pleasure."

The 87 companies listed on the exchange include some of the = hottest=20 names in Iraqi business. There's Baghdad Soda, Hader Marble and = Thesar=20 Agriculture, all well-established companies.

Dar al Salaam Insurance is trading at 3 dinars per share, while = Basrah=20 Bank is at 5 dinars and the Palestine Hotel -- where many = journalists live=20 -- trades at 95 dinars (1,500 dinars equal $1 U.S.).

Investors, brokers and exchange officials agree that financial = services=20 companies are getting the most play, given a boost by laws that = permit=20 foreign companies to buy chunks of Iraqi banks.

Orders come to brokers via telephone or e-mail.

But the technology gets decidedly low-tech from there. Each of = the 87=20 companies listed on the exchange has its own white board. The = exchange's=20 58 employees update bid and ask prices with erasable markers.

An electronic trading system is in the works, says Talib = Tabatabai,=20 chairman of the stock exchange's board of governors.

"We plan to turn it into automatic trading," says Tabatabai, = who was=20 educated at Florida State University. "But this will take time." =

Iraq has had a stock market since at least 1992, when Saddam = realized=20 he needed the private sector to help him revive an economy ruined = by=20 sanctions and war. Before the war it was called the Baghdad Stock=20 Exchange, operated by the Ministry of Finance. Though more = companies were=20 listed on the exchange than now, trading volume totaled only about = $460,000.

The current exchange is a self-regulated organization like the = New York=20 Stock Exchange, and owned by the 50 or so member brokerages = themselves.=20

Iraq's equities business has always been a small affair, where = brokers,=20 investors, company officials and exchange employees all know each = other.=20

That may sound like recipe for the kind of insider trading = scandal that=20 felled Martha Stewart.

But it also may be a blessing.

Tabatabai concedes the stock exchange lacks individual investor = safeguards taken for granted in the West.

He says they're not needed.

"We in Iraq still maintain a high level of decency," said = Tabatabai.=20 "We have never had fraud. We still live by honor."


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