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, Egyptian Financier acquires 6% cut in a local bank, October 22 2007

An Egyptian financier paid today, October 22, 2007, US $3.8 million for a six percent cut in the Iraq Middle East Bank, MEIB, according to reports coming out of the Iraq Stock Exchange. The deal was sealed officially in a special order executed in the trade hall of the ISX in which the ownership of 1.926 billion shares was transferred to the Egyptian businessman. The Iraq Stock Exchange officially opened its doors to foreign investors early August this year allowing for the first time non Iraqis to own and trade in the stocks of 93 joint stock companies listed in the exchange.

At a price of ID 2.45 per share the deal is worth ID 4.71 billion. It is not clear whether the transaction will lead to any structural change in the ownership of the bank that has 31 billion shares outstanding. The bank which was established in 1994 by Iraqi business family Al-Hafidh, is among the most successful chartered banks in Iraq with a consistent stream of healthy annual profits since its establishment. Its management structure is strictly controlled by the Hafidh family who so far seem to have kept their hands tight regarding possible friendly take over. Many small Iraqi commercial banks, including the Credit Bank, Dar-Sallam Bank, The Ahli Bank, Commercial Bank of Iraq and the Baghdad Bank have been bought by foreign investors. The buyers have been invariably been foreign financial institutions. This is in compliance with the regulations of the Commercial Bank Law in Iraq restricting controlling majorities, equity of more then 10%, in local banks to financial institutions.

	current session	previous session	%change
Market Volume Traded (shares million)	2439.24	774.60	214.90
Market Value Traded (ID m)	5578.73	1069.94	421.41
Market Capitalization (ID billon)	1890.97	1917.02	-1.36
Number of Transaction	236	301	-21.59
Market Value Traded ($m)	4.4630	0.85595	421.41
Market Capitalization ($billon)	1.513	1.53	-1.36

In other trade, the limelight caught the shares of the Baghdad Bank whose price continued leaping rising to ID3 per share up by 20% from ID2.5 few weeks ago. Established in the early 1990s this private commercial bank with 53 billion shares outstanding is half owned by United Gulf Bank of Bahrain and the Kuwaiti Iraq Holding Company. Over 67 million shares of this stock were traded today at price of ID3. The hike in price was not enough to induce sale offers, various brokers report.

The rest of the banking sector in the ISX showed poor performance with the price of eight traded stocks loosing ground. The losses ranged between 2% and 10%. Each of the Islamic Bank and the North Bank lost a hefty 10%. They closed at ID2.45 and ID0.9 respectively. Given that most banks are expected to show healthy profits during 2007, the fall in prices can only be explained by general market sentiment feeling jittery about border tensions with Turkey.

Overall the 19 listed private banks lost 1.6% of their market value in dull and very thin trade today. Total market value of these banks at closing prices is now ID 1,381 million or at current exchange rate $1.1 billion.

The decline affected an already very depressed manufacturing stock in the ISX. Five out of eight traded shares lost significantly. The bigger looser was the Iraqi Company for Carpets whose price plummeted by a full 16% down from ID3 to ID2.5. The slide however is perhaps not all that indicative of the intrinsic value of the stock given that it was the result of only two very small contracts involving the exchange of only 16,000 shares. The company has total 500 million shares outstanding. Once a prominent state owned enterprise, this private company now owns extensive property primarily large warehouses in and around Baghdad.

Over all, the plummet in prices of manufacturing companies listed in the exchange wiped some 1.6% of their total market capitalization value, down from $189 million to $186.

There is little to report on trade in other sectors in the exchange.

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.