Despite bombs, Baghdad stock exchange thinks big

Team Infidel

Forum Spin Doctor
By Deepa Babington
BAGHDAD, Nov 22 (Reuters) - Bomb blasts around Baghdad routinely
shake the trading room and it takes 10 days for an investor to receive proof
of a stock order, but Iraq's fledgling stock exchange is thinking big.
Operating out of a heavily protected building in a residential
sidestreet, the Iraqi Stock Exchange's 50 brokers write up their prices on
white boards but there are plans to introduce electronic trading by next
Despite the technological challenge of running a virtual exchange in
a country ravaged by daily bombs, officials want floor trading eliminated
partly because of the risks of attack.
"If I had all my brokers on one floor, I could take out an entire
market with one incident," said a U.S. official advising the exchange.
After shuttling around Baghdad looking for a home, the exchange
moved from a hotel to a permanent base this month, across the street from a
church in a Christian neighbourhood.
The constant threat of attacks from insurgents hangs over the
exchange, which is protected by concrete blast walls and security guards
toting guns.
"I keep checking on the building even when I'm at home, I'm always
in touch with security by phone and I sometimes even go back to the exchange
at midnight," says exchange CEO Taha Ahmed Abdul Salam.

However, compared to the problems that have dogged the country's oil
production -- its main hope for reviving a faltering economy -- the stock
exchange appears to be a relative success story.
Trading is limited to two-hour sessions twice a week, but there are
plans for five hours of trading five days a week once it is fully automated.

About 85 companies are listed -- including names like Mesopotamia
Investment and Baghdad Soft Drinks -- a figure Salam hopes will climb to at
least 100 by the end of the year.
An average of 700 million shares change hands each day, adding up to
a daily volume of about 2 to 3 billion Iraqi dinars. That equates to $1.4
million to $2 million -- compared to about $70 billion a day on the New York
Stock Exchange -- making Iraq's bourse among the world's smallest.
As for where the index has gone since they began properly
registering activity in November last year, Salam isn't sure, but he reckons
it's gone up by about 70 percent.
Electronic trading would connect the market to Iraq's central bank
and clearing banks through a wireless area network.
Once the market is automated, Salam also hopes many of Iraq's
state-owned companies will be privatised and allowed to float, greatly
boosting the market's capitalisation.
U.S. and Iraqi officials are hoping a law barring foreigners from
trading will be revoked once a new government is elected in December, a move
that could help draw in foreign investment.
The success of such a move depends on whether any foreigners are
willing to stomach the risk of investing in a country with a raging
insurgency and little political stability.
Exchange head Salam remains defiant.
"We know there are some dangers, but we don't have any
alternatives," said Salam. "The Iraqis have to do business."