New guide to Iraq's capital markets

As the Coalition Provisional Authority prepares itself to re-launch the Baghdad Stock Exchange, Atlas Investments' Research Team has put together an Iraq Capital Markets Report, which was prepared specifically with investors' needs in mind.

This 146-page guide, available in either English or Arabic, is the first of its kind in terms of quality and scope of information provided.

It contains detailed features on all 114 companies listed on the Baghdad Stock Exchange, including financial statements and analysis of the last four years available, making it the single most comprehensive report on the state of the BSE.

In addition, thorough overviews of 44 State-Owned Enterprises, some of which are currently slated for privatization or lease contracts, are also included. To obtain a copy please visit us at (http://www.atlasinvest.net/html/research/IraqReports/ICMR-2003.pdf)

As this task of reconstruction gets underway it would be very difficult to ignore the pivotal role that will be played by Iraq's capital markets. The Baghdad Stock Exchange, considered a pre-emerging market, has been in operation since 1992.

The exchange itself was fairly controlled by the government, which made sure it held most of the seats, through one form or another, on the BSE's only regulatory and governing body, the board of directors.

Despite offering an equal footing for local investors, the exchange's trading mechanism was still bound by certain limits and policies, which rendered it practically primitive.

A volatile market, the exchange was regularly used as a playground for speculative activity. As smaller investors were drawn into the game, the market witnessed a boom in 1999 and 2000, which can only be described as the calm before the storm, seeing as the BSE headed straight for a crash in 2001.

Companies on the exchange were categorized under four sectors: agriculture, services, banking and industrial, with the latter two being the most dominant.

With the year getting off to a tumultuous start, the CPA now has to ensure that the BSE witnesses a seamless transition as it undergoes a long awaited facelift. Some of the major issues to be tackled will be the overhaul of Iraq's Unified Accounting System and the establishment of an adequate depository.

On the other hand, investors also have the opportunity to participate in renovating the once State Owned Enterprises. As in any centralized economy many companies fell under the government's umbrella, and it is now up to the new Iraq Governing Council to decide the fate of these businesses.

In order for the economy to move towards a more liberalized model, it is expected that some of these firms will walk the privatization route, be it through short-term leases or an eventual full sale.

The issue impeding most investors from delving into Iraq now is security which, in effect, is the biggest obstacle for any form of development and investment. Nonetheless, this problem acts as a double edged sword, upping risk from one end, but keeping the competition at bay from the other.