On August 11, the Iraqi paper Addustour (Constitution) reported that the government would be providing six hotels with a total of US$ 300 milion to upgrade their facilities in preparation for the Arab League summit, which is scheduled to be held in Baghdad next March. The six—the ISX-listed Palestine (HPAL), Babylon (HBAY), Baghdad (HBAG), Mansour (HMAN), and Ishtar Sheraton (HISH) hotels, and the unlisted Rashid Hotel—will receive 75% of the new funding as interest-free loans, the remaining 25% as equity injections.
While the division of the $300 million among the hotels was not reported, it seems reasonable to suppose that most of it will go to the listed companies. If each gets a sixth of the total, their share will come to $250 million, a sum almost equal to their combined market capitalization of $253 million (as of August 14).
So far, however, market participants seem unimpressed by this news. (See chart.) While HBAG, HBAY, and HPAL all closed up 10% on August 11, as of August 17, HPAL and HBAY were up only 6% and 5% from their respective August 10 closing prices. (HMAN and HISH have been suspended from trading since July 6 and August 8, respectively.) HBAG, which rose on a mere ID 19,800 worth of trading on the 11th, hasn’t traded at all since then.