Custom Search

At the end of last month the Egyptian investment bank EFG-Hermes announced that it would begin offering equity swaps on ISX-listed shares to institutional investors. (See this story.) This new product has the potential to bring about a dramatic increase in foreign participation in the Iraqi stock market.

An equity swap allows an investor to earn the return on the underlying name without actually owning any shares. The issuer of the swap mimics the performance of the stock by doing trades in its own account that parallel clients' buy and sell orders while simultaneously debiting or crediting their cash accounts by the corresponding settlement amounts.

Swaps have three main advantages. First, they replace local counterparty risk with that of the issuer. Second, they eliminate the need for a custodian bank. Third, they can greatly simplify the investor’s back office and audit work.

In a market like Iraq, these are all important considerations. Many foreign institutions will be unwilling to accept the risk of dealing directly with Iraqi brokers. So far no one is offering custody services for ISX-listed shares, which means that many funds cannot invest at all. (See this post for more on custodian banks.) And even when the Iraq Securities Commission finally gets around to issuing custodian banking licenses many investors are still going to find dealing with EFG-Hermes to be a lot less trouble administratively.

In fact, even in markets like the UAE, Qatar, and Kuwait—all of which have custodian banks—many foreign investors continue to prefer swaps solely for the sake of ease of settlement and execution.

The lack of a custodian for ISX-listed shares is suddenly starting to look like a red herring. Institutions no longer need to wait for this problem to be sorted out. Now they can start trading in the time it takes their own legal and compliance departments to review the EFG-Hermes swap agreement. (This is a non-ISDA document so this process may take a bit longer than it otherwise would.) Some may be ready to take the new shortcut to Iraq as early as the end of this month.

Qatar Airways has announced further expansion of its rapidly-growing international network with five new passenger routes, more cargo services and capacity increases to a number of destinations served direct from the airline’s Doha hub.

Among the new routes are two new destinations in Iraq – the northern city of Erbil and capital Baghdad.

Both routes will be served four times a week, using Airbus A320 aircraft.

The Erbil-Doha route will start in May, while the Baghdad-Doha route will start in June.

(Source: Qatar Airways)

Advertising Feature

Rabee Securities Iraq Stock Exchange (ISX) market report (week ending: 8st March 2012).

Please click here to download a table of listed companies and their associated ticker codes.

ID1,343 / $1,474,  +0.3% (weekly change). The number of weekly traded shares was 16.1 bn and the weekly trading volume was ID25.8bn ($21.8mn).

ISX Company Announcements

• This week United Bank (BUND) announced its 2011 annual report. (Please see the table [1.1] (pg:5))
• Iraq’s central bank has reportedly placed private bank, Warka Bank under guardianship to supervise it through insolvency. According to the report from Reuters, Mudher Kasim, deputy governor of the central Bank of Iraq, said: “We gave Warka a chance to have Standard Chartered to be a partner but that did not happen, so there was nothing we could do as a financial authority, but to intervene as a guardian. He said the central bank would appoint a new temporary administration to run Warka Bank, which would be given a month to appoint an auditor to determine how to restructure it and whether it needs to sell assets to raise capital. (Iraq-Business News)
• Al-Mansour Bank (BMNS) held its General Assembly (GA) meeting on Mar. 6, 2012. In this meeting, shareholders approved the board decision to increase the capital from ID100bn to ID236bn through 51% bonus issue and 85% rights issue. Rights issue will be only paid by the major shareholder, Qatar National Bank (QNB) and its share in the bank will reach 51% from 23%. In addition, BMNS decided to distribute 7.12% cash dividend to shareholders.
• Mosul Bank (BMFI) held its GA meeting on Mar. 5, 2012. Shareholders decided to increase the capital from ID75bn to ID100bn by around 13% bonus issue and 20% rights issue.
• Sumer Commercial Bank (BSUC) will hold AGM on Mar. 15, 2012 to discuss 2011 financial statements and capital increase through rights issue. ISX suspended trading of BSUC starting Mar. 8, 2012.
• Ishtar Hotel (HISH) will hold AGM on Mar. 22, 2012 to discuss 2010 financial statements. ISX will suspend trading of HISH starting on March 15.
• Al-Mansour Pharmaceuticals Ind. (IMAP) will hold AGM on Mar. 31, 2012 to discuss 2011 financial statements and cash dividend ratio. ISX will suspend trading of IMAP starting on March 24.

For the full RS Weekly Bulletin in PDF go to:  www.rabeesecurities.com.

Iraq is demonstrating its unique position in the Middle East again, flexing its new diplomatic muscle to resolve an oil exporting crisis between the West, OPEC and Iran, according to this article from NIQASH. But who’s behind these efforts: Iran, the US or Iraq itself?

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

As the current head of OPEC, Iraq is testing its diplomatic mettle further, by mediating between the oil exporters in the Gulf countries, the EU and neighbouring Iran.

The crisis that Iraq is dealing with involves Iran and Saudi Arabia and oil exports from throughout the region. Recently, the countries of the European Union agreed to impose sanctions on Iran’s oil exports, banning the signing of any long term oil export contracts come July 1, 2012. The move was intended to put pressure on Iraq because if its plans to build up nuclear capacities.

And the July deadline was supposed to give the EU members nations time to find alternative supplies. However Iran then decided to cease oil exports to the UK and France earlier, as way of increasing pressure on the Europeans, pre-empting their ban – although apparently the gesture was largely symbolic as both nations had already stopped buying Iranian oil.

The other thing that Iran has done is threaten to close the Hormuz Strait, one of the most important shipping channels in the world; around one fifth of all crude oil passes through the narrow shipping channel, which lies between the Gulf of Oman and the Persian Gulf.

The Basra Investment Commission has approved a $100 million waste plant to be built by Dow Chemical's Kuwait branch, according to AKnews.

The company, which already has plants in Kuwait, Saudi Arabia and Qatar, will enter Basra and invest in water purification projects and will consider providing environmental solutions, professional consultation and technical services.

Waste and industrial water will be treated and recycled, converting polluted river water and high saline ground water into safe water for drinking and irrigation.

Tawfiq al-Manei, company adviser and director of the International Bureau of Consultancy and Economic Studies, said: "We chose Basra because of its multiple benefits, most importantly the geographical location for the State of Kuwait.

"The rate of waste in Basra reaches to 2,000 tons a year which makes us in dire need for such projects to recycle and treat waste and improve the environmental situation in Basra."

(Source: AKnews)

Reuters, citing banking sources familiar with the matter, reports that Qatar Telecom (Qtel) plans to buy out a private equity partner's 19-percent stake in Iraqi telecoms operator Asiacell.

Qtel, the Gulf state's former monopoly, has a 30-percent stake in Asiacell, Iraq's number two operator, while its partner MerchantBridge owns 19 percent.

Morgan Stanley is reportedly assisting Qtel in the process, while London-based MerchantBridge is being advised by Credit Suisse.

In October, Asiacell appointed HSBC and Morgan Stanley to manage an initial public offering in Iraq. A potential sale of MerchantBridge's stake was likely to happen before the IPO, the sources said.

(Source: Reuters)

PRweek reports that the Iraqi unit of Kuwaiti telecoms company Zain has hired PR agency support in advance of its listing on the Iraq Stock Exchange.

The firm has been planning an initial public offering (IPO) in Iraq since the summer and has asked London-based M:Communications to support communications relating to the listing process.

M: will provide PR and investor relations advisory services in Iraq itself.

The Zain listing is one of three major telecoms floats in Iraq planned for 2012. However, the Zain account is understood to be the only one of the three that has specified on-the-ground support in Baghdad.

It is thought the need for representation in Iraq proved problematic for a number of agencies that ultimately declined to pitch for the brief.

Nicholas Lunt, MD of M:’s Gulf business, added that the company would also be working with the management of Zain Saudi Arabia.

The news comes days after it was confirmed that FTI Consulting was working for Iraqi telecoms firm Asiacell ahead of its planned flotation later in the year. The firm, partly owned by Qatar Telecommunications, plans to sell a 25 per cent stake, potentially valuing the firm at more than $4bn.

Korek, a mobile group in which France Telecom and Kuwaiti logistics group Agility have a stake, is also planning a 2012 IPO. Korek is not thought to have selected a comms consultancy at this stage.

(Source: PRweek)

International learning and skills specialist Atlas has expanded the global footprint of facilities capable of delivering the groundbreaking new global training initiative IMIST for the oil and gas industry with the approval of the first centre in Iraq.

The accreditation of the Al Delma facility in Basra City demonstrates Iraq’s commitment to developing its energy industry and creating a workforce trained to the globally recognised basic safety standard, IMIST online.

It brings the total number of invigilation centre’s approved to deliver International Minimum Industry Safety Training (IMIST) around the world to 16, with facilities spanning Australia, Thailand, Singapore and the Philippines as well as the United Arab Emirates, Qatar, Nigeria and Russia among others.

The Al Delma centre will be capable of delivering the programme to up to 250 people every day.

Bilal Mahmood, CEO of Al Delma said:

“Long-term underinvestment in the development of our oil and gas personnel has meant considerable training is needed if we are to accomplish the goal of a safe and skilled workforce for the future.

“As one of the biggest training centres in Iraq we have built our reputation on being quick, smart and reliable and we are delighted to be the first to gain approval to deliver this new international training and be a model to others in the country.”

Developed by global oil and gas training standards body OPITO International, IMIST brings for the first time a standardised level of basic safety training to an estimated 1.5million oil and gas workers worldwide. The training assesses basic safety knowledge in nine subject areas including risk assessment, asset integrity, the use of hazardous substances, working at height and mechanical lifting among other subjects.

IMIST online, which was launched in the Middle East in July 2011, is delivered in partnership with Atlas via approved invigilation centres only.

By gaining Atlas approval to deliver the course, workers using the Al Delma centre will have their IMIST training accepted by employers all over the world. It will also reduce the burden of training costs for companies with both new entrants and experienced workers able to undergo a full range of mandatory and voluntary health and safety courses under one roof.

Atlas chief executive John Rowley said:

“This is a significant step forward for the oil and gas workforce in Iraq in terms of creating a safe, sustainable and profitable oil and gas industry for the country.

“It is also a major milestone in the adoption of a common industry standard for basic safety and competency in oil and gas around the world. The support which has been shown for this initiative is evident in the rapidly increasing footprint of centres which now spans across all four corners of the globe and is testament to the industry’s desire to improve safety at all levels.”

IMIST is being rolled out across 30 countries worldwide throughout Asia, Africa and the North America over the next two years. It will be delivered via e-learning and tailored to meet each region’s specific workforce, language and geographic needs.

Diabetics in Kuwait, Iraq and Palestine can now use their mobile phones to receive personalized alerts and information on exercise and diet, thanks to a new mHealth service being offered by Qtel Group companies there. Qtel Group will soon be offering this service in other countries where it is present.

Representatives from the Qtel Group and from some of the world's most innovative companies recently met in Qatar to discuss such innovations to mobile healthcare as well as how mobile phone technology can be used to support key healthcare goals across the region.

Collaborating with the global mobile association, the GSMA, the Qtel Group is organising a series of workshops on the subject of "mHealth", as part of a wider series of international events held with the mHealth Alliance, a campaign to champion the use of mobile technologies to improve health throughout the world. Mobile health, or "mHealth," is a term used for the practice of medicine using wireless devices, such as mobile phones, PDAs and remote monitoring devices, to improve patient care.

Global studies have shown that involving mobile devices in the practice of healthcare can have an immediate and significant impact. In remote locations and for rural communities, it can provide a vital link to physicians and healthcare advisors. In major cities, it can deliver incredible savings. US operator Verizon estimates, according to reports, that mobile broadband can improve health care productivity in the US to the tune of $6.9bn, which could increase nearly eight-fold by 2016.

Hosted at the W Doha hotel, representatives from across Qtel's Group of companies gathered together to gain a greater understanding on the dynamics of the health industry and how operators can make a difference to both patients and societies worldwide.

ExxonMobil's Chief Executive, Rex Tillerson (pictured), refused on Tuesday to answer questions about the company's deal with the Kurdish Regional Government (KRG).

When asked at a World Petroleum Congress in Qatar if he thought the contracts would hold up under Iraqi law, Tillerson said,  "I'm not in a position to comment on that".

At a press conference after the panel, Tillerson was again asked about the ramifications of the Kurdish contracts, and again declined to answer.

Last month, the U.S. State Department said it warned Exxon that any deals it signs with the Kurdish government may be annulled by Baghdad.

(Source: CNN)