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, the political factor, September 11 2007

Performance in the Iraq Stock Exchange is for sure not driven by fundamental economic variables only. It is perhaps more forcefully influenced by expectations of which way politics and security is going in the country. Local investors represent a fair and random representation of the business community in Iraq. Iraqi businessmen bet more money in the ISX when they see signs of an eventual political recovery. They flee the ISX when there are ominous signs. In consequence, disparate expectations are summed up in prices, gloom or boom.

By the above yardstick, opinions seem to tilt in favor of boom. Despite the retreat of 2006, current prices, of the same listed stock, are still at least three times higher then in 2006. Current market capitalization is $1.6 billion compared with around $0.7 billion during 2002. Then there was 88 listed companies compared with 94 now. Annual trade volume then was about ID19 billion. In comparison trade volume in 2006, ID 147 billion is seven folds higher.

Even short term spouts of price fluctuation are heavily influenced by perception of political and security developments. Gains on the security front in Baghdad and neighboring areas normally reflect positively on the market and vice versa. One is tempted to argue that the market is highly sensitive to reporting on the military and political situation in Iraq.

Hence it is not surprising that any positive military assessment of developments in Iraq, even if little, should manifest itself favorably in the market. In today’s trade, September 11 2007, prices itched up marginally, trade volume surged both in terms of value and number of shares and according to brokers an optimistic mood was clearly prevalent, albeit a restrained one.

	current session	previous session	%change
Market Volume Traded (shares million)	390.99	339.99	15.00
Market Value Traded (ID m)	638.96	529.37	20.70
Market Capitalization (ID billon)	2002.85	1993.07	0.49
Number of Transaction	254	184	38.04

Market Value Traded ($m)	0.5071	0.42013	20.70
Market Capitalization ($billon)	1.602	1.594	0.49

Out of the 29 stocks traded today, 12 made varied gains. Only five retarded and the rest remained still. The shares of seven banks made gains. Those include Mosul Bank 8%, Warkaa Bank 6%, Babil Bank 4%, Basra Bank 4% and likewise Ahli Bank. Significantly the stocks of Baghdad Beverage were up by 13% and those of the Hilal Industries by 8%. Overall market capitalization was up by half a 1% to just over $1.6 billion when calculated at today’s closing prices and an exchange rate of ID1250 to the US dollar.

Paralleling the price gain, there was also a 15% rise in the number of shares traded, from 340 to 391 million. The value of these exchanged shares was ID639 million, up on previous trade by 21%.

Market Breadth
Advancers	12
Decliners	5
Unchanged	12
Total Traded	29
Total not Traded	65
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.