Iraq is on its way of progress – ISX listings are encouraging

With the launch of initial public offering on Iraq Stock Exchange by the Iraqi Communication giant company Asiacell, it was assumed that a lot of things have been changed for the country after the exact 10 years of US-led invasion.
The IPO, worth US$1.24 billion (Dh4.55bn) also move ahead with a positive step, having decided to go with doubling the capitalization of the Baghdad-based ISX from $4.7bn to $9.3bn overnight.

A fund manager in the US at Euphrates Advisors, Geoffrey Batt stated that though the mainstream media is portraying Iraq as a failure, Iraq has raised its capital market with more than $1bn from foreign and domestic investors.
Total three telecom companies are present in Iraq and Asiacell is the biggest of them all. After Asiacell gets listed in ISX, Zain Iraq, another telecom company of Iraq, which is identified as second largest company of Iraq, is expected to get listed into the ISX by this year, that too within a few months.

The strategy of forcing the companies to go public may seem to be an unorthodox policy, but it seems that the strategy is working and Iraq is gaining its capital from this.
It is to be noted that Mr. Batt has launched his ISX focused fund, which is worthy of US$53m - in 2010. He remarked that history has shown the investors that some out-of-favor nations had immensely benefitted the brave investors. Some examples of such nations can be – Russia - after the fall of Soviet, Hong Kong, Italy – after World War II, South Korea, etc.

According to Mr. Batt, from an investor’s point of view, macro-stability of the market is required. This is something which would encourage the investors to invest in a country. On this context, thinking about the political and social scenarios of a country would be a misery and certainly not something which an investor should be concern with.

From on-paper perspective Iraq is doing well and has huge prospects. The Economist Intelligence Unit (EIU) has announced that Iraq will experience a steady GDP growth by 8.2 percent per year. By 2017, it is expected to climb to 9 percent per year. Over 55% GDP has increased in comparison with the last years and it has become mainly possible due to oil production growth.

Iraqi parliament and cabinet have decided to allow foreign investments into the country, in the year of 2007. Shwan Taha stated, "It will be a game-changer in the sense that Asiacell has put Iraq and the ISX on the radar screens of funds and fund managers. But you cannot be overly optimistic because, simply, we have come from such a low point that any normalization in the financial system in Iraq would be a huge gain."

Taha Abdulsalam, who is the ISX chief executive, has remarked that he is quite happy about the Asiacell listing. But there are some concerns too, which are noted by him, as he illustrated that private sector in Iraq has to be developed at a rapid speed. The country does not have adequate private investments and most of the economy of the Iraq is based on Oil.