One old investor used binoculars to watch stock prices. Others yelled out instructions to brokers who scribbled down prices on a white board.Outside, barbed wire sealed the street leading to the two-storey building surrounded by high blast walls. Armed guards carefully frisked visitors.
It was a quiet day at the Iraq Stock Exchange in Baghdad, where prices have yet to fully recover from heavy losses they took after almost two years of sectarian bloodshed made trips to the bourse a risky venture.
Taha Ahmed Abdul-Salam, the exchange’s chief executive, said he hoped things would improve soon thanks to an electronic system set for launch early in 2008 to speed up transactions and make it easier for foreigners to trade Iraqi shares.
“This is the biggest personal and professional challenge, not just for me, but for the entire market,” Abdul-Salam told Reuters in an interview in his small, first-floor office.
“We hope to start in the first two months of 2008. The whole issue depends on the success of the testing period before it is operational.”
Like so many other buildings, looters stripped the stock exchange bare of its furniture and equipment soon after the U.S.-led invasion toppled Saddam Hussein in 2003.
The market reopened in mid-2004 and share prices soared, even while attacks wrought havoc on Iraq’s streets and power shortages and long queues for gasoline disrupted everyday life.
But trading was suspended for several months in 2006 after a dramatic rise in violence following the bombing of a major Shi’ite Muslim shrine in Samarra in February that year.
When trading resumed, share prices plunged.
“2006 was the most difficult year for us,” said Lubna Anwar, one of about 10 women brokers at the trading floor.
“We used to go to the exchange knowing that we could be targeted by a bomb or an explosion.”
A security crackdown on al Qaeda and Shi’ite militants launched in February, which included the deployment of 30,000 extra U.S. troops, contributed to sharp drops in attacks and helped some shares trim their losses, broker Muqdad Jassem said.
Anwar, an accounting graduate from the University of Baghdad and a broker since 1992, said she and many other dealers attended training courses in neighboring Jordan on how to use the new trading system, which will be supported by the Nordic and Baltic stock exchange company OMX.
“It was easy,” said Anwar. “Only old brokers with no computer background faced problems in learning,” she added.
Brokers said they hoped the new system would attract more foreign investment and boost trade volumes.
Out of 94 listed Iraqi companies, only 21 traded during last Sunday’s two-hour session, with shares worth 399 million Iraqi dinars ($319,200) changing hands.
“Foreign investors … are increasing bit by bit,” Abdul-Salam said. “In September an Egyptian bought more than one billion shares in a deal worth more than two billion dinars.”
Jassem said finalizing a transaction by a foreign investor can take up to a week under present rules, which require among other things the investor to send a passport copy ratified by an Iraqi diplomatic mission.
Brokers said foreigners trade Iraq banking shares, the most active sector, while industrial and agricultural stocks remain largely illiquid. Some investors said shares they had bought for as much as 60 dinars were now trading at 3 dinars.
“Selling now means a big loss,” said Mahmoud Ahmed, a 45-year-old investor, as he stood alone in a corner, his arms folded against his chest. “Do not believe anybody who says there is movement in the market.”
Karim Kamal, head of equity research at the National Bank of Kuwait, said going electronic was unlikely to encourage foreigners to snap up more Iraqi shares.
“I strongly doubt it,” he said in a telephone interview.
“Mainstream investors would tend to wait (to make sure) the current lull in violence is not temporary before even beginning to examine the economic situation.”