Advertising Feature

Rabee Securities Iraq Stock Exchange (ISX) market report (week ending: 18th April 2019).

Please click here to download a table of listed companies and their associated ticker codes.

The RSISX index ended the week at IQD592 (+1.8%) / $636 (+1.7%) (weekly change) (-10.3% and -10.4% YTD change, respectively). The number of week traded shares was 5.2bn and the weekly trading volume was IQD4.0bn ($5.3mn).

ISX Company Announcements

  • Iraqi Carton Manufactories (IICM) will hold an AGM* on May. 9, 2019 to discuss and approve 2016 annual financial results. The company has been suspended from trading since Aug. 6, 2017 due to not disclosing 2016 and 2017 annual financial results.
  • Asiacell (TASC) will resume trading on Apr. 21, 2019 after discussing and approving 2018 annual financial results and deciding to distribute 100% cash dividend (IQD1.00 dividend per share, 12.2% dividend yield).
  • ISX suspended trading of Region Trade Bank for Investment and Finance (BRTB) starting Apr. 17, 2019 due to the GA that will be held on Apr. 22, 2019 to elect 4 original and 4 alternative board members.

Advertising Feature

Rabee Securities Iraq Stock Exchange (ISX) market report (week ending: 11th April 2019).

Please click here to download a table of listed companies and their associated ticker codes.

The RSISX index ended the week at IQD581 (+0.5%) / $626 (+0.5%) (weekly change) (-11.9% and -11.9% YTD change, respectively). The number of week traded shares was 6.2 bn and the weekly trading volume was IQD5.0 bn ($4.1 mn).

ISX Company Announcements

  • Al-Bilad Islamic Bank for Investment & Finance (BLAD) will hold a GA on Apr. 21, 2019 to change the bank’s name to Al-Ataa Islamic Bank for Investment & Finance.
  • ISX will suspend trading of Region Trade Bank for Investment and Finance (BRTB) starting Apr. 17, 2019 due to the GA that will be held on Apr. 22, 2019 to discuss increasing the bank’s board members and electing 4 original and 4 alternative board members.
  • ISX suspended trading of Asiacell (TASC) starting Apr. 10, 2019 due to the AGM* that will be held on Apr. 15, 2019 to discuss and approve 2018 annual financial results.

By Ahmed Tabaqchali, CIO of Asia Frontier Capital (AFC) Iraq Fund.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The market, as measured by the Rabee Securities RSISUSD Index, declined by -1.7% in March, bringing the YTD decline to -13.9. Turnover, while up +23% from February’s dismal levels, was still mostly in-line with the historic lows of the last few months. Foreign selling, the cause of the last few weeks’ declines, continued along the recent low levels dragging prices lower given the overall low market liquidity.

The market’s obliviousness to the increasing signs of the return of liquidity to the economy (discussed here over the last few months) has extended into an obliviousness to solid earnings growth for one of the market’s top banks- an earnings growth that has all the characterises of a classic banking recovery after a severe economic contraction.

It was argued here in November, following the earnings recovery of mobile operator AsiaCell, that “The next few quarters should see a similar recovery for the battered banking sector, with probably the first indicator to recover being the quality of loans. A return of liquidity and an economic pick-up should be followed by a recovery in the quality of bad loans and the reversal of NPL’s (non-preforming loans) with past provisions becoming earnings, thus providing the first boost to earnings recovery. This should be followed by growth in loans and deposits …”.

Mansour Bank’s (BMNS) 2018 results provide a textbook example of the above argument in action. BMNS reported revenue and income growth of +28.1% and +42.6% respectively for 2018 over 2017. Both revenues and net income were helped by a reversal of some of the past provisions for NPL’s (non-preforming loans) as some clients, helped by the economic pick-up, began to pay back loans that were classified as non-performing. However, even without this reversal of provisions, both revenues and earnings would have been up +13.1% and +15.5% respectively on the back of strong underlying metrics.

The first of these underlying metrics was deposit growth of +25.8% in 2018 over 2017, driven by the growth in private sector deposits. This lends support to the argument, made here in January,  that the growth in the monetary base M0 is an early indicator of a recovery in private sector deposit growth.  The second and most promising metric is an acceleration of loan growth to +6.1% in 2018 over 2017, after an almost flat trend. BMNS’s management singled its confidence in its future outlook by declaring a 9.7% dividend yield- up 40% in absolute terms over last year’s dividend payment.

BMNS’s financial performance during the years of conflict up to 2017 was reviewed here in October after it was caught in the selloff that engulfed the banks during the second half of 2018. The improvement in 2018 suggest the end of the tough times for the bank, and potentially for other strong banks in general.

BMNS’ financial performance during the years of conflict, the stability of 2017 and the start of the recovery in 2018 can be seen through the two charts below that look at loans/non-performing loans (NPL’s), and deposits and their association with government budget surpluses/deficits given the central role that government spending plays in the economy. BMNS’ loan and NPL data were supplied by the research team at Rabee Securities which is gratefully acknowledged, while other data were taken from the Ministry of Finance, the Central Bank of Iraq, the Iraq Stock Exchange and company reports. Data from 2010-2014 are based on Iraqi accounting standards, while data from 2015-2018 are based on IFRS, and all calculations use the official USD/IQD exchange rate.

BMNS’ loan book growth peaked in 2015 at the same time that NPL’s peaked. Unlike many other banks in the sector, its loan book was almost flat during 2015-2017, and started to pick up in 2018. NPL’s as a percentage of loans declined by over 60% from the peak (chart below).

Mansour Bank: Loans & NPL’s 2011-2018

(Source: Ministry of Finance, Central Bank of Iraq, Iraq Stock Exchange, Rabee Securities, Asia Frontier Capital)

Unlike, almost all other banks in the sector, BMNS experienced deposit growth throughout the crisis, which accelerated during the relative stability in 2017, and continued into 2018. A flat loan book and sharply increasing deposits resulted in a very low loan/deposit ratio allowing BMNS the opportunity to grow its loan book. Moreover, most of these loans are collateralized by property, as most of banks’ loans are in Iraq, and where the norm is for collateral value at 2x the loan. It should be noted, that most of these deposits are in the form of current accounts, followed by on-demand deposits underscoring the nascent nature of the Iraqi banking system and the opportunity for future growth as the society adopts banking culture.

Mansour Bank: Deposits and Loan/Deposit ratio 2011-2018

(Source: Ministry of Finance, Central Bank of Iraq, Iraq Stock Exchange, Rabee Securities, Asia Frontier Capital)

While not all of the other banks enjoy the same financial strength of BMNS, yet the macro forces that contributed to BMNS’s recovery are the same for the sector as a whole and should therefore create the conditions for a recovery in the sector. These macro forces are boosted by the December data from the Ministry of Finance which show that the government recorded a budget surplus of about USD 22.9 bln for 2018, or a two-year surplus of USD 24.4 bln by end of 2018.

The government’s 2019 non-oil investment programme is about USD 12.5 bln, which would be equivalent to about a 7.5% stimulus to the estimated non-oil GDP for 2019. While it is highly unlikely that this would be immediately spent, yet the spending should start with a trickle but grow as investment spending gets underway- and should therefore provide a further boost to the expected banking sector recovery.

The market has made a mockery of expectations, made here over the last few months, that its divergence from its past close relationship with oil revenues (a proxy for the forces driving the economy) should come to an end. Nevertheless, the strong fundamentals of the market’s leading stocks such as Pepsi bottler Baghdad Soft Drinks (IBSD), mobile operator AsiaCell (TASC), and Mansour Bank (BMNS) coupled with resuming growth in oil revenues only add to the unsustainability of this divergence (see chart below).

(Source: Iraq’s Ministry of Oil, Rabee Securities, Asia Frontier Capital)

(Note: Oil revenues as of Mar)

Please click here to download Ahmed Tabaqchali’s full report in pdf format.

Mr Tabaqchali (@AMTabaqchali) is the CIO of the AFC Iraq Fund, and is an experienced capital markets professional with over 25 years’ experience in US and MENA markets. He is a non-resident Fellow at the Institute of Regional and International Studies (IRIS) at the American University of Iraq-Sulaimani (AUIS), and an Adjunct Assistant Professor at AUIS. He is a board member of the Credit Bank of Iraq.

His comments, opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any fund or security or to adopt any investment strategy. It does not constitute legal or tax or investment advice. The information provided in this material is compiled from sources that are believed to be reliable, but no guarantee is made of its correctness, is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding Iraq, the region, market or investment.

Advertising Feature

Rabee Securities Iraq Stock Exchange (ISX) market report (week ending: 4th April 2019).

Please click here to download a table of listed companies and their associated ticker codes.

The RSISX index ended the week at IQD578 (+3.0%) / $622 (+3.1%) (weekly change) (-12.4% and -12.4% YTD change, respectively). The number of week traded shares was 5.5 bn and the weekly trading volume was IQD3.7 bn ($3.0 mn).

ISX Company Announcements

  • Al-Bilad Islamic Bank for Investment & Finance (BLAD) will hold a GA on Apr. 21, 2019 to change the bank’s name to Al-Ataa Islamic Bank for Investment & Finance.
  • ISX will suspend trading of Asiacell (TASC) starting Apr. 10, 2019 due to the AGM* that will be held on Apr. 15, 2019 to discuss and approve 2018 annual financial results.
  • Iraq Noor Islamic Bank for Investment (BINI) resumed trading on Apr. 4, 2019 after discussing and approving 2018 annual financial results and deciding to distribute 2.4% cash dividend (IQD0.024 dividend per share, 2.4% dividend yield).
  • ISX suspended trading of Iraqi Date Processing and Marketing (IIDP) starting Apr. 4, 2019 due to not disclosing 2018 annual financial results.
  • ISX requested Investment Bank of Iraq (BIBI) on Apr. 3, 2019 to disclose its AGM minutes that was held on Mar. 30, 2019.
  • ISX requested Middle East Producing & Marketing – Fish (AMEF) on Apr. 3, 2019 to disclose its AGM minutes that was held on Mar. 26, 2019.
  • Investment Bank of Iraq (BIBI) resumed trading on Mar. 31, 2019 after electing 7 new original board members and 7 alternative members.

Advertising Feature

Rabee Securities Iraq Stock Exchange (ISX) market report (week ending: 28th February 2019).

Please click here to download a table of listed companies and their associated ticker codes.

The RSISX index ended the week at IQD561 (-4.7%) / $604 (-4.7%) (weekly change) (-14.9% and -15.0% YTD change, respectively). The number of week traded shares was 8.9 bn and the weekly trading volume was IQD3.7 bn ($3.1 mn).

ISX Company Announcements

  • Trans Iraq Bank for Investment (BTRI) resumed trading on Mar. 27, 2019 after discussing and approving 2017 annual financial results and deciding to distribute 3.03% cash dividend (IQD0.0303 dividend per share, 4.3% dividend yield).
  • ISX suspended trading of Investment Bank of Iraq (BIBI) starting Mar. 26, 2019 due to the GA that will be held on Mar. 30, 2019 to elect 7 new original board members and 7 alternative members. The bank will resume trading on Mar. 31, 2019.
  • ISX suspended trading of Iraq Noor Islamic Bank for Investment (BINI) starting Mar. 25, 2019 due to the AGM* that will be held on Mar. 28, 2019 to discuss and approve 2018 annual financial results.
  • ISX requested Modern Animal and Agricultural Productions (AMAP) on Mar. 25, 2019 to disclose its AGM minutes that was held on Feb. 28, 2019.
  • Cross Transactions: 5.3 bn shares of Iraqi Middle East Investment Bank (BIME) on Mar. 24, 2019, which represents 2.1% of BIME capital. 100 mn shares of Iraqi Agricultural Products and Marketing Meat (AIPM) on Mar. 26, 2019, which represents 2.0% of AIPM capital.

Advertising Feature

Rabee Securities Iraq Stock Exchange (ISX) market report (week ending: 21st March 2019).

Please click here to download a table of listed companies and their associated ticker codes.

The RSISX index ended the week at IQD589 (-2.5%) / $634 (-2.6%) (weekly change) (-10.6% and -10.7% YTD change, respectively). The number of week traded shares was 4.1 bn and the weekly trading volume was IQD1.8 bn ($1.5 mn).

ISX Company Announcements

  • ISX will suspend trading of Iraq Noor Islamic Bank for Investment (BINI) starting Mar. 25, 2019 due to the AGM* that will be held on Mar. 28 to discuss and approve 2018 annual financial results.
  • Al-Mansour Bank (BMNS) resumed trading on Mar. 20, 2019 after discussing and approving 2018 annual financial results and deciding to distribute 7% cash dividend (IQD0.07 dividend per share, 9.7% dividend yield).
  • Middle East Producing & Marketing – Fish (AMEF) resumed trading on Mar. 20, 2019 after electing new board members.
  • According to ISC announcement published on Mar. 20, 2019, Al-Harir for Money Transfer (MTAH) has been delisted from the Iraq Stock Exchange.
  • ISX suspended trading of Trans Iraq Bank for Investment (BTRI) starting Mar. 17, 2019 due to the AGM* that will be held on Mar. 20, 2019 to discuss and approve 2017 annual financial results.
  • United Bank (BUND) resumed trading on Mar. 17, 2019 by the CBI decision to remove the custody from the bank due to completing the procedure of electing new board members.

Advertising Feature

Rabee Securities Iraq Stock Exchange (ISX) market report (week ending: 14th March 2019).

Please click here to download a table of listed companies and their associated ticker codes.

The RSISX index ended the week at IQD604 (+1.6%) / $651 (+1.6%) (weekly change) (-8.4% YTD change). The number of weekly traded shares was 27.5 bn and the weekly trading volume was IQD10.8 bn ($9.0 mn).

ISX Company Announcements

  • According to the ISX announcement, the opening price of the IQD5.0 mn class bonds (CB125) will be IQD5,383,562 on Sunday (Mar. 17, 2019). [Table: 2.3]
  • ISX will suspend trading of Investment Bank of Iraq (BIBI) starting Mar. 26, 2019 due to the GA that will be held on Mar. 30, 2019 to elect 7 new original board members and 7 alternative members. The bank will resume trading on Mar. 31, 2019.
  • Ashour Hotel (HASH) will hold an AGM* on Mar. 17, 2019 to discuss and approve 2013 annual financial results. The company has been suspended from trading since Aug. 8, 2018 for not disclosing 2017 annual financial results.
  • United Bank (BUND) will resume trading on Mar. 17, 2019 by the CBI decision to remove the bank from its custody due to completing the procedure of electing new board members.
  • Al-Mansour Bank (BMNS) held its AGM* on Mar. 14, 2019. In the meeting, the bank decided to distribute 7% cash dividend (IQD0.07 dividend per share, 9.7% dividend yield).
  • Original shares of International Islamic Bank (BINT) resumed trading on Mar. 12, 2019 after approving to increase the capital from IQD100 bn to IQD250 bn through 150% rights issue.
  • ISX requested Union Bank of Iraq (BUOI) to provide its AGM* minutes which was held on Mar. 6, 2019.
  • Credit Bank of Iraq (BROI) resumed trading on Mar. 10, 2019 after discussing and approving 2017 annual financial results and deciding to distribute 2.5% cash dividend (IQD 0.025 dividend per share, 6.4% dividend yield).

Advertising Feature

Rabee Securities Iraq Stock Exchange (ISX) market report (week ending: 14th March 2019).

Please click here to download a table of listed companies and their associated ticker codes.

The RSISX index ended the week at IQD604 (+1.6%) / $651 (+1.6%) (weekly change) (-8.4% YTD change). The number of weekly traded shares was 27.5 bn and the weekly trading volume was IQD10.8 bn ($9.0 mn).

ISX Company Announcements

  • According to the ISX announcement, the opening price of the IQD5.0 mn class bonds (CB125) will be IQD5,383,562 on Sunday (Mar. 17, 2019). [Table: 2.3]
  • ISX will suspend trading of Investment Bank of Iraq (BIBI) starting Mar. 26, 2019 due to the GA that will be held on Mar. 30, 2019 to elect 7 new original board members and 7 alternative members. The bank will resume trading on Mar. 31, 2019.
  • Ashour Hotel (HASH) will hold an AGM* on Mar. 17, 2019 to discuss and approve 2013 annual financial results. The company has been suspended from trading since Aug. 8, 2018 for not disclosing 2017 annual financial results.
  • United Bank (BUND) will resume trading on Mar. 17, 2019 by the CBI decision to remove the bank from its custody due to completing the procedure of electing new board members.
  • Al-Mansour Bank (BMNS) held its AGM* on Mar. 14, 2019. In the meeting, the bank decided to distribute 7% cash dividend (IQD0.07 dividend per share, 9.7% dividend yield).
  • Original shares of International Islamic Bank (BINT) resumed trading on Mar. 12, 2019 after approving to increase the capital from IQD100 bn to IQD250 bn through 150% rights issue.
  • ISX requested Union Bank of Iraq (BUOI) to provide its AGM* minutes which was held on Mar. 6, 2019.
  • Credit Bank of Iraq (BROI) resumed trading on Mar. 10, 2019 after discussing and approving 2017 annual financial results and deciding to distribute 2.5% cash dividend (IQD 0.025 dividend per share, 6.4% dividend yield).

Advertising Feature

Rabee Securities Iraq Stock Exchange (ISX) market report (week ending: 7th March 2019).

Please click here to download a table of listed companies and their associated ticker codes.

The RSISX index ended the week at IQD595 (+3.0%) / $640 (-2.0%) (weekly change) (-9.8% and -9.8% YTD change, respectively). The number of week traded shares was 14.8 bn and the weekly trading volume was IQD6.4 bn ($5.3 mn).

ISX Company Announcements

  • According to the ISX announcement, the opening price of the IQD5.0 mn class bonds (CB125) will be IQD5,375,890 on Sunday (Mar. 10, 2019). [Table: 2.3]
  • ISX will suspend trading of Trans Iraq Bank for Investment (BTRI) starting Mar. 17, 2019 due to the AGM* that will be held on Mar. 20, 2019 to discuss and approve 2017 annual financial results.
  • ISX will suspend trading of Middle East Producing & Marketing – Fish (AMEF) starting Mar. 14, 2019 due to the GA that will be held on Mar. 19, 2019 to elect new board members. AMEF will resume trading on Mar. 20, 2019.
  • ISX will suspend trading of Al-Mansour Bank (BMNS) starting Mar. 11, 2019 due to the AGM* that will be held on Mar. 14, 2019 to discuss and approve 2018 annual financial results.
  • Credit Bank of Iraq (BROI) will resume trading on Mar. 10, 2019 after discussing and approving 2017 annual financial results and deciding to distribute 2.5% cash dividend (IQD 0.025 dividend per share, 6.4% dividend yield). The opening price will be IQD0.37 with +/-20% change.
  • Al -Hilal Industries (IHLI) will resume trading on Mar. 10, 2019 due to disclosing its 2017 annual financial results.
  • ISX requested Modern Animal and Agricultural productions (AMAP) on Mar. 5, 2019 to disclose its AGM* minutes that was held on Feb. 28, 2019.
  • ISX suspended trading of International Islamic Bank (BINT) starting Mar. 4, 2019 due to the AGM* that will be held on Mar. 7 to increase company’s capital from IQD100 bn to IQD250 bn through 150% rights issue.
  • ISX announced that Al-Ameen Insurance (NAME) resumed trading on Mar. 4, because it received a letter sent by the Board of Insurance which is stating that NAME is continuing its activities, except life insurance.
  • Cross Transactions: 13.0 bn shares of Trust International Islamic Bank (BTRU) on Mar. 3, 2019, which represents 5.2% of BTRU capital.

By Ahmed Tabaqchali, CIO of Asia Frontier Capital (AFC) Iraq Fund.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The Iraqi market, as measured by the Rabee Securities RSISUSD Index, declined by -9.7% in February, taking the year to date decline to -12.5%.

February’s decline takes the index below the multi-year lows made in May 2016, for a decline of ­-70% from the multi-year highs of January 2014 to February 2019, versus the -68% decline from the same highs to May 2016. However, the severity of the decline and the immediate triggers are the only things that the two months have in common, while all other indicators, both fundamental and technical, are diametrically opposed.

The immediate trigger for the decline in the last two months was a foreign portfolio liquidation, the same trigger behind that of the period leading into May 2016. However, the similarity ends there, as the current foreign liquidation is that of a relatively small single portfolio vs. the massive multi-month liquidation witnessed then as the chart below demonstrates.

(Source: Iraq Stock Exchange (ISX), Asia Frontier Capital)

The above chart is an index of the absolute level of foreign selling & buying with their respective moving averages, clearly showing the contrast between the two periods (both highlighted in light orange). The main reason for the similarity, in effect of the selling on the index, is due to the extremely low liquidity in the current market- a low level that has been discussed in “Volumes and Reversion to the Mean”.

The average daily turnover per month since late 2014 (chart below) shows the association of low turnover with the index levels. Moderate selling in such an environment of extremely low liquidity exerts a strong downward pressure on prices, which coupled with low prices turns a few price increments into much larger percentage moves. A case in point is Bank of Baghdad (BBOB) which started the month at IQD 0.280 per share. Due to selling it declined to IQD 0.250 by month’s end. This is equal to three price increments (the minimum price increment is IQD 0.010), yet it is a -10.7% decline from 0.280 to 0.250, which in turn accounted for a -1.2% downward move in the index. Another issue of low liquidity is how it affects higher priced stocks, resulting in them trading in much larger price increments, with the end result producing the same percentage change effects as for the lower priced stocks.

(Source: Iraq Stock Exchange (ISX), Rabee Securities, Asia Frontier Capital)

The macro picture between 2016 and now couldn’t be more different. In 2016 Iraq’s economy was being crushed by the double whammy of collapsing government revenues, due to falling oil prices, and the sharply increasing cost of the ISIS war- a war that many international commentators believed marked the end of the Iraqi state. However, the end of the ISIS war cemented Iraq’s integrity and its position as a key player in the Middle East. This is evidenced by the high number of heads of state and high-level official visits to Iraq over the last few months as relationships which were forged during the ISIS-conflict are being developed into future economic relationships.

On the other hand, the economy in 2019 is gradually benefitting from the expansionary effects of the reversal of the forces that crushed it. In particular, the healing effects of higher oil revenues over the last two years is beginning to filter down into the broader economy with the first signs being seen in the recent recovery in broad money, or M2 which acts as a proxy for economic activity, as can be seen in the chart below.

(Source: Central Bank of Iraq, Iraq’s Ministry of Oil, Asia Frontier Capital)

(Note: M2 as of Nov with AFC est.’s for Dec; Oil revenues as of Feb)

The period leading to the May 2016 low witnessed multi-month declines in oil revenues that had a massive negative effect on economic activity as first seen in the stagnation of M2, followed by a decline as manifested in the onset of a severe economic contraction. It was natural then that these effects would negatively impact corporate earnings and ultimately lead to a marked decline.

A mirror image reversal is taking place in 2019 as multi-month increases in oil revenues have revived M2 which points to an economic recovery. The early signs of this is evidenced in the growth of customer deposits (consumers, businesses and government) with banks, which can be seen in the chart below through the growth of the IQD Current Account (C/A) component of banks’ reserves with the Central Bank of Iraq (CBI) – the recovery of which accelerated in May 2018, with the latest data as of early February indicating a continuation of this trend.

(Source: Central Bank of Iraq, Asia Frontier Capital)

(Note: M0 as of Jan, IQD C/A component of bank’s reserves as of Jan)

Other signs of economic recovery can be seen from the recent earnings reports of consumer spending related companies such as Pepsi bottler Baghdad Soft Drinks (IBSD) and mobile operator AsiaCell (TASC). Of the two, the data from TASC is promising, as the company is especially leveraged to the economic recovery given the severe hits its profitability took due to the ISIS conflict which were discussed fully in “Telecoms Dial up Recovery

The drag on the economy thus far in 2018 and 2019 has been due to the political paralysis before, during, and after the May 2018 parliamentary elections. This led to a torpidity in government spending, but a silver lining of the government inaction has been the steady growth in the government budget surplus that is estimated to be about USD 24.5 bln in the two years ending in 2018. This paralysis in government spending has finally come to an end with parliament’s approval of the 2019 budget in mid-January.

The 2019 budget’s non-oil investment programme is about USD 12.5 bln, which would be equivalent to about a 7.5% stimulus to the estimated non-oil GDP for 2019. While it is highly unlikely that this would be immediately spent, yet the spending should start with a trickle but grow as investment spending gets underway.

Just as the negative fundamental forces in 2016 were the reason for the market’s decline, their reversal and the early signs of economic recovery should lead to an economic growth which must find its way into corporate earnings’ recovery- which in turn should lead to a rising market. Logically, this ought to mean an end to the market’s divergence from its past close relationship with oil revenues (a proxy for the forces driving the economy) which is currently at the widest it has been for the last few years (see below).

(Source: Iraq’s Ministry of Oil, Rabee Securities, Asia Frontier Capital)

(Note: Oil revenues as of Feb)

In conclusion, the fundamentals seen in the prior charts surely argue that it’s only a matter a time before the liquidity in the broader economy finds its way into the Iraqi equity market, the reigning ugly duckling of frontier markets, to turn it into a swan or at least into a duck that flies.

Please click here to download Ahmed Tabaqchali’s full report in pdf format.

Mr Tabaqchali (@AMTabaqchali) is the CIO of the AFC Iraq Fund, and is an experienced capital markets professional with over 25 years’ experience in US and MENA markets. He is a non-resident Fellow at the Institute of Regional and International Studies (IRIS) at the American University of Iraq-Sulaimani (AUIS), and an Adjunct Assistant Professor at AUIS. He is a board member of the Credit Bank of Iraq.

His comments, opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any fund or security or to adopt any investment strategy. It does not constitute legal or tax or investment advice. The information provided in this material is compiled from sources that are believed to be reliable, but no guarantee is made of its correctness, is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding Iraq, the region, market or investment.