Foreign investors’ appetite for Iraq’s stock market is rising before planned IPOs by the country’s three mobile telephone operators, but the fledgling market’s small size means it may struggle to cope with the listings, according to a report from Gulf News.
The Iraq Stock Exchange (ISX) is an outpost of private sector business in Iraq, which is still dominated by state-run firms. Market capitalisation of the bourse, which started operating in 2004, is about $4bn with average daily trading value only around $2.8mn.
Successful stock market listings of the three mobile phone firms, Asiacell, Korek and Zain Iraq—a requirement of their operating licences—would be seen as a triumph for Iraq’s effort to create a diversified economy and a sign that it was establishing a stable development path after years of conflict.
The listings could also trigger a fresh wave of foreign interest in the market, which currently is heavily weighted towards banks, accompanied by a range of industrial, insurance, hotel and agriculture firms.
ISX chief executive Taha A Abdulsalam has said he expects the initial public offers of shares to double the market’s capitalisation. But with fewer than half of the 85 listed stocks active daily, such a boost in value could destabilise the market.
“The IPOs, first of all, they should put it in the market gradually,” Iraq Communications Minister Mohammed Allawi told Reuters. “If you put all the shares, the price will collapse for sure.”
Taking the companies public will not be an easy task, however. The companies themselves have been reluctant to move quickly until the stock market is more developed and they can be sure of getting good prices for their shares.
Zain Iraq, a unit of Kuwait’s Zain, Asiacell, an affiliate of Qatar Telecom and Korek, part-owned by France Telecom SA and Kuwait’s Agility, all missed an initial August 31 deadline set by the CMC for their listings, which now look likely to go ahead sometime next year.