Iraq Stock Exchange: Global Aspirations Amidst Internal Challenges, 19 DEC

  Iraq Stock Exchange: Global Aspirations Amidst Internal Challenges

Financial markets are one of the modern economic pillars through which savings are directed towards investment, in addition to expressing the strength and stability of the economic stability in any country. Therefore, activating and developing the stock market is considered one of the basic matters that will help achieve development in Iraq, as it will provide investors with greater opportunities to invest in stocks and achieve profits.

However, the Iraqi Stock Exchange, when compared to the markets of neighboring countries, is considered small in terms of trading value, as foreign investors’ confidence in the Iraqi market is still low due to unstable political and economic factors, as well as administrative and legal procedures that hinder the opening of accounts for foreign investors and the transfer of profits.

The market was established in 1992 under the name of the Baghdad Stock Exchange pursuant to Law No. 24 of 1991. After 2003, its name was changed to the Iraq Stock Exchange. It was governmental and at that time was able to list 113 Iraqi private and mixed joint-stock companies.

Weakness of industry and agriculture

The financial advisor to the Prime Minister, Mazhar Muhammad Salih, said in an interview with Shafaq News Agency, "Iraq inherited a one-sided economy that lives on oil revenues due to half a century of wars, conflicts, siege and economic isolation."

He added, "Unfortunately, the two most important sectors that form the backbone of the stock market's diversity are industrial manufacturing companies, agricultural companies, and the logistics companies associated with them, and these two sectors are very weak."

He continues, "The agricultural and industrial sectors only constitute 6 to 7% of the gross domestic product, and most of their activity is individual and non-contributing. It is natural for the market to follow the trend of the overall economy and its nature in terms of the degree of diversity. "

Saleh points out that “the banks’ share in the stock market dominates more than 50% of the market’s activity, and there are commercial activities associated with it. This is due to the liberalization of the national economy with high liberalism that transformed the single-rent economy into a consumer market economy linked to external supply chains due to the high financing leverage provided by oil revenues and the operating expenses associated with them.”

He stressed that "the new economic policy of the state is based on a productive partnership between the state and the private sector to raise the levels of economic diversity. Therefore, the strength of the stock market is undoubtedly linked to the strength of economic diversity in our country."

Limited market hours

The broker in the Iraqi Stock Exchange, Mohammed Madloul, said in an interview with Shafak News Agency, "The Iraqi market is still backward compared to the countries of the region. For example, Egypt and the Emirates have a price tape for stocks that remains open for 24 hours in public squares and streets, and any citizen can buy company shares from outside the market. However, the situation in Iraq is limited to specific hours, and the market ends between the seller and the buyer during these hours."

He added, "The value of shares of some listed companies is being traded at prices lower than the dinar so far, which represents an image of the small size of investment that the market is suffering from," adding that "the market value of banking sector companies increased from 6.88 trillion Iraqi dinars in 2021 to reach 10 trillion dinars in 2024."

Small market

Economic expert Dhurgham Muhammad Ali said in an interview with Shafaq News Agency, "The Iraqi market is still small due to the lack of large companies and a strong private sector in Iraq, and thus the market's performance reflects the weakness of the various Iraqi development sectors and the public's weak confidence in it."

He explained that “trading in the market is still technically less than its Gulf counterparts, and we lack sound management of investment portfolios, and the value and volume of the stock exchange’s performance is directly proportional to the efficiency of the companies whose shares are listed on it, in addition to the weakness of brokerage firms and the restrictions imposed by the market on their work and the weak influence of the Securities and Exchange Commission, the supervisor and legislator of the local stock exchange.”

Smart devices for the market

For his part, the Executive Director of the Iraq Stock Exchange, Taha Ahmed Abdul Salam, pointed out in an interview with Shafak News Agency, that "economic and political stability play an important role and the future vision of joint-stock companies."

He explained that "the number of joint-stock companies in the market has increased from 105 to 107 companies, and we are working on listing new companies, which all play a role in attracting new investors."

He added, "The Iraqi market signed a contract with the Egyptian Stock Exchange to use OMS, which allows users to trade via smart devices, and we expect it to be launched in June or July of next year."

The Iraqi Stock Exchange is expected to witness a significant increase in the coming months and years, especially with the improvement in the revenues of the listed companies and the development of their businesses, which makes it a market capable of attracting domestic and foreign investments  link