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Future of Iraqi Stock Exchange Is Unleashed by Asiacell IPO

The IPO or Initial Public Offering of Iraqi telecommunication company Asiacell tops Iraqi Stock Exchange right from the year of 2003. Followed by 2003 US invasion in Iraq, ISX or Iraqi Stock Exchange was incorporated in the year of 2004. It consists of all those stocks that were listed in previous stock exchange, which was known as Baghdad Stock Exchange, established in the year of 1990, under the regime of Saddam Hussein.


Asiacell IPO has contributed largely in ISX by doubling the value of exchange. Beside that the company is also a symbol of encouragement for many other multinationals as observing this company; many other companies are getting listed with ISX.
Zaab Sethna, partner at Iraq-focused investment and financial advisory services firm Northern Gulf Partners has stated that this was the first ever IPO to come. He also explained that Iraq has high possibilities and a wave of modern companies is venturing forward to invest in Iraq. The Iraqi community has become aware in these days, sensing for a legitimate capital market, where the emerging companies can access both international and domestic capitals.


At February 3rd, Asiacell was listed and initially it had to strive for its telecommunication license. By April 2012, the company should list 25% of its share, as stipulated by the lagal provisions. Zain Iraq and Kortek Telecom – two other giant telecom companies of Iraq, are expected to get listed soon.

The Shortcomings of Being Listed in Iraq


Due to poor market infrastructure, there are some limitations in listing in ISX. Chairperson of Rabee Securities, Shwan Taha said that it is not that the Asiacell could not involve underwriters, but they could have easily demanded for certain things. He also opined no underwriter is that much crazy to deal with a company which requested to get listed in Iraq, without offering a global depositary receipt.


According to Taha, collecting money from the people of Iraq was the biggest challenge. He remarked that his company was prepared for surprises as it is quite simple in such a country, where electricity is still a major concern.


Regulations of ISX


Iraq need to build a prominent securities law as the ISX is still regulated with the old ideas, which were used to run Baghdad Stock Exchange. Along with that some US regulations are also followed by the country’s new stock exchange, i.e. ISX. Though the economic principals are regarded as successful, the effects of US invasion are still under the question. In 2003, during the time of US invasion, Iraq’s debt was enormous and as an economy it was not considered as viable. Lack of documentation and management policies were the actual culprits. Sethna said the debt service would have changed the fate of the entire revenue generation of the country. An appeal for a comprehensive securities law has been into the parliament for a long, but due to the presence of some other major issues, the work is on a pending status.


To overcome the bureaucracy of Iraq, listed companies have to initiate for an array of measures. They need to submit quarterly and annual reports each year. Absence of presenting such report, listed companies may face bans.

Forth Coming Developments


Transparency will still continue to remain a question in near future. However, a lot of developments will definitely come in the Stock Exchange of Iraq, as revealed by the experts. In 2008, the transparency issues of ISX were resolved meticulously and following that in 2009, some major development took place in ISX.


In this frontier market, politics is definitely a major concern. The future of ISX is directly linked with the future political scenario of the country. If there is future stability in the domain of Iraqi politics, then it is expected the fate of ISX is bright and it is expected to experience an exponential development graph.


For Kurdish region, new exchange is also proposed to be developed. As this region is under turmoil and political disturbance, some significant developments can solve a few issues of this region. Erbil Stock Exchange in Kurdistan is proposed recently by the governing body of Kurdistan, in order to make it separate from the federal structure of Iraq.


Experts, like Donovan has claimed that he is hopeful about the future of Erbil Stock Exchange and he thinks that it will grow in a better manner than the ISX, as Kurdistan government is ahead in terms of development, from the federal government. However, having two stock exchanges in a same country seems a bit confusing option. According to Batt, it is quite puzzling as the biggest question is that what companies will get listed in Kurdistan Stock Exchange.

Updated 24 Feb 2013 | Soruce: IFLR | By S.Seal
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