ISX, Manufacturing gains 7%, October 02 2007

Trade in the Iraq stock exchange on the first trade session of October 2007 was marked by resumption of dealings in the shares of the Middle East Bank. The bank went off trade in July 2007 in order to increase its capital by the issue of 14.8% split through the issue and distribution free of charge to old shareholder of 4 billion new shares.

Established in 1995 and owned and directed by the Hafidh family from the Northern Province of Mosul, this bank has 31 billion shares outstanding. Three years ago this was only 15 billion but has been successively shored up through free splits, 26%, 42% and the current split of 14.48%. All the splits were free of charge capitalizing annual net profits. Published quarterly financials of the bank for 2007 promise healthy profits with the likelihood of further increments in the bank’s paid up capital up to the mandatory 50 billion. The return price of ID2.45 was disappointing however. It is exactly 15% below the July close before the split thus wiping out gains of the shareholders. It remains to be seen whether the stock will rally in the next trade sessions.

In other trade, significant price changes touched the Baghdad Bank. Its price has gone up in recently by 6% from ID2.5 to ID2.65. The bank has a paid up capital of ID53 billion. Three years ago this was only ID5,280 million. The rise in capital was possible when the United Gulf Bank of Bahrain and the Kuwaiti Iraq Holding Company joined forced to raise the capital of the bank through a friendly take over bid which was approved by the Central Bank of Iraq.

Together these two Gulf institutions now hold a shareholding of 49% in the bank with the Iraq Holding Company in possession of 9.9% of this total capital. An Iraqi business family, Sharif, is believed to still hold a substantial, 18-20% holding in the bank. The Baghdad Bank is among the oldest private banks to be chartered in the early 1990s. Its performance has consistently been good and the bank has many assets in real estate.

	current session	previous session	%change
Market Volume Traded (shares million)	460.98	716.52	-35.66
Market Value Traded (ID m)	697.22	1022.47	-31.81
Market Capitalization (ID billon)	1933.76	1925.39	0.43
Number of Transaction	256	220	16.36
Market Value Traded ($m)	0.557	0.817	-31.81
Market Capitalization ($billon)	1.547	1.54	0.43

In all, some 170 contacts were struck involving banking stock of 14 small private banks. There are a total of 19 banks listed in the ISX but not all trade every session. These contracts involved the exchange of 306 millions shares at a total value of just over ID 517 million or the equivalent of $413,000. Given that trade in the ISX which is still to date manually operated this small amount nevertheless composed 75% of total volume. Today’s close prices with only two of banks up, six down and the rest foot, had a total effect of lowering total market value of all banking stocks by half a one percent.

Despite very the low turnover yet manufacturing stocks faired a little better. For example, the shares of Northern Pepsi continued the rally of the two previous sessions closing at ID1 up by 5% on previous session. The stocks of Chemical Industries, which is a manufacturer of plastic products, gained a whopping 17% closing the trade session at ID2.1. The company has 7,600 million shares outstanding and is regarded as one of the main industrial companies listed in the exchange. It used to be a state owned enterprise until privatized in the late 1980s. Like sister companies such as Hilal and the New Paints Company, it is believed that it owns a lot of assets especially real estate. Overall the gains of the industrial sector today reflected in an increase of 7% in its total market value. This market value is estimated to be equal to $191 million representing 12% of the total market worth of the ISX listed companies.

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.

© Kubba Consultants 2007