Fuelled by expectations of the imminent opening of the hitherto closed doors of the ISX to non Iraqi investors, the market continued its upward surge for the eleventh trade session this month

ISX trade falls to pre 2003 levels, August 30 2007

Trade volume today, September 02 2007, in the Iraq Stock Exchange plummeted to ID440 million or $350,000 which is among the lowest since the exchange was reopened in June 2004 following restructuring reform. The low level of trade, accompanied by slide in prices, reflects subdued business expectations amid slow economic recovery, little inflow of foreign money into the market and concerns over political and security conditions in the country.

In manual trade where brokers scribble buy and sell orders on whiteboards using felt pens, there were today some 300 million shares that exchanged hands. This is 20% down from previous trade session. The exchange trades only three days a week. The number of contracts, 163, was slightly up on previous session. Trade volume, number of contracts and the number of shares traded was less then half of the average recorded during 2007.

The ISX doors were opened early August to foreign investors but so far all indications point to little inflow of foreign cash despite the expressed interest of many foreign investors. Analysts point out that the ISX must aspire to attract institutional investors such as investment funds, both local and foreign. They add that this will not be an easy task in view of several factors prime among them the perceived and actual high risk of financial investment in a country that is still enduring a high degree of political and security instability. To induce local institutional investment the like of state pension funds, the market needs to achieve more depth and reduce volatility.

Meantime, much of the gains achieved by the market during July of this year stimulated by an anticipation of an inflow of foreign buyers have been eroded during July. Among the 22 shares traded today more than half, 13, ended the trade session on the down side. Banks which normally constitute the bulk of trade both in terms of value, number of contracts and number of traded shares, performed badly. The shares of seven important listed banks were down. The biggest loser was the Ahli Bank down by 12%. The shares of Warkaa Bank fell by 6% to ID1.55 eroding all the gains made by a recent free share split. The shares of the Commercial Bank fell to a record low of ID 1.65, down by 5%. This bank which is among the first private banks to be chartered in 1992 has an outstanding number of shares equal to 60 billion. At today’s market price the bank is now worth slightly under $80 million. The Iraq Investment Bank, established in the mid 1990s, which today has about 30 billion outstanding number of shares, closed today at ID 1.45 down from previous trade by 3%. At this closing price the market value of the bank fell to $34 million which many punters feel is way on the low side given the past performance of the bank, its relative share in the banking market and its comparatively strong financial position. The only bank to make gains today was the North Bank. Established in 2003 the bank today has 25 billion shares outstanding. Today’s close price, ID4.25, is up by 3% raising the market value of the bank to $84 million. Total trade in banking shares was to the tune of ID350 million, $280,000 making up 80% of the total market at par with the much older Commercial bank. With total market capitalization of $1,176 million today’s trade in banking stock is infinitesimally small. This is not atypical since the ISX like its predecessor the Baghdad Stock Exchange is still very thin with low turnover. During downturns, volume slumps, only to surge again during upturns in a very volatile cycle.

	current session	previous session	%change
Market Volume Traded (shares million)	302.94	383.19	-20.94
Market Value Traded (ID m)	440.83	925.40	-52.36
Market Capitalization (ID billon)	2014.67	2039.27	-1.21
Number of Transaction	163	156	4.49

Market Value Traded ($m)	0.3499	0.73444	-52.36
Market Capitalization ($billon)	1.599	1.62	-1.21

Performance of the next biggest sector in the ISX, manufacturing, was also greatly depressed. For example trade in the shares of Baghdad Beverages, the leading bottler of Pepsi Cola, closed the day down by nearly 8% at ID1.2. There were 29 small contracts in the trade of these shares totaling 39 million. The company has 60 billion shares outstanding. The aggregate value of trade in manufacturing stock was only ID 75 million or a mere $60,000.

Market Breadth
Advancers	1
Decliners	13
Unchanged	8
Total Traded	22
Total not Traded	72
Total	94

DISCLAIMER: This document has been compiled and issued by Kubba Consultants, which has obtained the information from sources it believes to be reliable, but Kubba Consultants makes no guarantee as to either its accuracy or completeness and has not carried out an independent verification. Kubba Consultants accepts no responsibility or liability for losses or damages incurred as a result of opinions formed and decisions made based on information presented in this report. This document is not an offer to sell or solicitation to buy any securities. The opinions and estimates expressed herein are those of the issuer.