Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Looming War Can't Scare Iraq Investors

BAGHDAD, Iraq -- The drums of war may be beating in Washington, but the sound is falling on deaf ears on the tiny Baghdad stock market.

Investors, at least for now, have gone on a buying spree, and the main index of the fledgling bourse has risen by more than a third since Iraqi President Saddam Hussein accepted a United Nations resolution that demands he disarm or face serious consequences.

"People buy and sell, and there's optimism and action," Taha Abdul Salam, head of the bourse's studies department, said in an interview.

To an outsider aware of looming war clouds, such a blithe attitude seems incongruous. But some Iraqis appear to be betting on a brighter future for their oil-rich land.

Many of the bourse's 115 companies, mainly industrials and banking firms, had distributed earnings and free stocks, "so it's only natural that prices go up," Abdul Salam said. "I think the market will grow at a more than average rate."

The three-story bourse building lies in a commercial district of Baghdad. The site was rebuilt after being bombed in the 1991 Gulf War, when it housed a government data center. The bourse facility moved there in 1998 after its previous site got too crowded for the increasing number of investors.

Up to 400 investors converge on the market when it opens on Saturdays, Mondays and Wednesdays.

Like other fledgling Arab bourses, price moves are capped on the upside and downside to guard against crashes. The limit is now 5 percent each side of the previous session close.

Many investors are businessmen in suits. Some use binoculars to read stock trades scribbled on scores of white plastic boards circling the trading pit. These will be replaced by electronic screens this year, Abdul Salam said.

One investor, Jassem Saleh, sporting traditional Bedouin attire, looked as if he would be more at home in a desert tent. But his appearance belied financial acumen.

"I buy when stocks fall, I sell when they rise," said Saleh, explaining how his modest nest egg grew to 1.5 million dinars ($750), not much by world standards, but a small fortune for many Iraqis impoverished by 12 years of UN sanctions.

"Recently, amidst the [U.S.] threats, prices rose instead of falling. It was a kind of response from us," he said.

Investors ogled three aging television screens flashing meager but vital data: the latest deal, the price and the prior close price. Trading is open only to Iraqis for fear foreigners would gobble up corporate Iraq, exploiting the collapse of the local currency.

Daily turnover of about 250 million to 400 million dinars is tiny by international standards.

But warts and all, Baghdad's market enjoys renewed vigour.

Though investors in insular Iraq are not exactly tuned to global equity markets, the main 95-company Baghdad Stock Index surged as they did in the 1990s, enjoying a stellar bull run in its first seven years until prices peaked in 2000.

The BSI surged to 2,170 by the end of 2000 from a starting point of 100 in 1993. Even the bull stampede of the 1990s on Wall Street paled by comparison.

But the bourse was mired in a slump in 2001 that many here blamed on sanctions. The index fell to as low as 1,312 by the end of that year.

Lately, the BSI has revived, rising to a high of 1,938 on Dec. 12 from 1,410 on Nov. 9. It closed at 1,750 on Dec. 18, the last figure available before the New Year holidays.

Iraq's acceptance Nov. 8 of a tough UN resolution demanding that it abandon its weapons of mass destruction or face serious consequences encouraged investors to pile back in.

"There was apprehension and fear, but this decision suggests hope," explained one investor, Faisal al-Aasam, 57. "It's as if the option of a military strike has been pushed away."