BAGHDAD, Oct 9 (Reuters) - Worried about the global financial meltdown? Here’s a tip: try Iraq.
Stock markets across the globe may be tanking, but the Baghdad bourse is booming, with the general index of Iraq’s stock exchange up by nearly 40 percent last month. The floor of Baghdad’s stock exchange was heaving with investors and brokers on Thursday, many glued to their phones and eager to snap up bargains on the second day of trading after a national holiday.
Brokers — sweat stains spreading under their armpits — wrote the latest stock prices on a wall of whiteboards, the Baghdad bourse’s answer to computer screens.
Investors waved and made hand signals at the brokers working behind a low partition. Hotels and banks were the hottest picks among the exchange’s 95 listed companies.
“People know the hotel stocks are undervalued ... They think that in the new year companies will come to Iraq and the hotel business will flourish,” said investor Saad Jalil, adding that the bourse was the busiest he’d ever seen it.
“People think there will be a jump in stocks, because they’re undervalued. The world banking crisis won’t affect us, our market is sealed off from the outside. We don’t even have electronic trading.”
Share prices on Iraq’s stock exchange plummeted during the years of sectarian warfare after the 2003 invasion that toppled Saddam Hussein. Investors say visiting the bourse was almost impossible when militia and death squads ruled the streets.
But violence has fallen to four-year lows. Baghdad’s stock index jumped a year ago when the fall in violence was most pronounced, and has zoomed again in recent weeks as investors eye a reconstruction bonanza fuelled by huge oil revenues.
Global financial woes are unlikely to infect Baghdad, the head of the stock exchange said.
“The people exposed to the financial crisis are foreign investors ... (but) their participation in our market is not greater than three percent,” Taha Abdul-Salam told Reuters.
There are still worries ahead. Iraq’s 2009 budget depends on oil staying above $80 a barrel. Prices have fallen to below $90 in the last few months, down from over $140 in July.
“All of Iraq’s economy is tied to oil. The oil price has gone down, so Iraq’s revenues will go down. So of course it will affect reconstruction and other businesses, which will affect stock market investors,” said stock market player Abu Haider.
Investors also complain about the Iraqi Central Bank’s high interest rates — at least 16 percent since January last year.
But some boasted that they could to avoid the problems now being faced in the West because of lax rules and easy credit.
“The American system is all on credit. Here, take a loan, here, take a loan,” said investor Adel al-Jawahiri. “You can’t have a totally free market. You have to have rules.”
“From what I understand of why the credit crisis happened, I can only describe their administration as stupid.” (Writing by Mohammed Abbas: Editing by Dominic Evans)