Analysis of Iraq Stock Market

Analysis of Iraq Stock Market.

The Iraq Stock Exchange (ISX) was instituted in accordant to the law 74 on April 18, 2004. The Board of Governors (BOG) was formed in accordance with Order No. 74 referred to as Security Law. The board members were named in the Iraq Incidents Issue No. 3983. Under the supervisory endorsement and guidance of the Iraq Securities Commission (ISC), the BOG established and resumed the ISX market on 24, June 2004 with 15 registered companies. ISX had a task of disclosing, controlling, regulating, and launching continuous trading of the listed companies’ shares. Iraq Stock Exchange operates five trading sessions every week, Sunday to Thursday (Wincott, 1947).

There had been an increasing rate of registered companies in the Iraq stock exchange. At the beginning of the year 2011, the ISX moved from 40% to 65% attaining the highest increase in the trade history. As per the regulation and requirement by the Securities Law, the ISX through ISC supervision held an election for the new BOG members on June 21, 2005. Its first session began with a manual trading where auctions were drafted on the boards, and orders got executed in the specified units either partially or even in full. The buy orders were given priorities for the highest price while the sell orders were at the lowest price. This commenced immediately trading resumed till 19th April, 2009. An advancement was initiated which enable companies to trade electronically. Using NASDAQ OMX in April 2009, electronic trading was introduced to the market that replaced the white boards trading.

King (1947) states that there are various sectors trading on Iraq Stock Exchange (ISX) and are as follows: banks, insurance, investment, services, industry, tourism & hotels, agriculture, telecom and money transfer. The price indices and companies in each sector are analyzed within the tables as follows:
Bank Sector
This is the largest sector that has the highest number of registered companies. They includes; Ashur International Bank For Investment, Babylon Bank, Commercial Bank of Iraqi, Bank Of Baghdad, Dijlah & Furat Bank for Development, Dar es salam Investment Bank, Economy Bank For Investment, Elaf Islamic Bank, Gulf Commercial Bank, Investment Bank of Iraq, Iraqi Islamic Bank, Iraqi Middle East Investment Bank, Kurdistan International Bank, Mousil Bank For Development& Investment, Al-Mansour Bank, National Islamic Bank, National Bank Of Iraq, North Bank, Credit Bank Of Iraq, Sumer Commerical Bank, Trans Iraq Bank for Investment, United Bank, Union Bank Of Iraq and Al- Warka Investment Bank. The table below represents banks’ monthly performance security indices as at Nov. 2010.

Price Index – Gain or Loss in Percentage

Companies Closing Index % Change Companies Closing Index % Change
Dijlah & Furat Bank for Development 0.69 9.52% Kurdistan International Bank 1.89 0.00%
Ashur International Bank For Investment 0.75 0.00% Mousil Bank For Development& Investment 0.73 0.00%
Babylon Bank 0.40 2.56% Al-Mansour Bank 0.80 1.28%
Commercial Bank of Iraqi 0.61 4.69% National Islamic Bank
Bank Of Baghdad 1.53 6.67% Trans Iraq Bank for Investment
Dar es salam Investment Bank 0.96 1.04% Credit Bank Of Iraq 0.98 6.32%
Economy Bank For Investment 0.72 2.70% Sumer Commerical Bank 0.90 10.00%
Elaf Islamic Bank 0.67 2.99% United Bank 0.77 2.67%
Gulf Commercial Bank 0.88 1.15% Union Bank Of Iraq 0.96 6.67%
Investment Bank of Iraq 0.84 2.35% Al- Warka Investment Bank   1.26 0.00%
Iraqi Islamic Bank 0.88 4.49% North Bank 1.09 1.82%
Iraqi Middle East Investment Bank 0.68 1.47% National Bank Of Iraq 0.78 6.67%
Basrah International Bank for Investment. 1.15 4.17%  

            KEY:                                                         Gain

                                                                              No gain/loss

                                                                              Loss

Two of the companies didn’t participate on trade thus neither recorded any security index nor made a gain/loss on trade. Seven companies made loss during market exchange with Summer Commercial Bank leading with a total of 10% loss (-10%) of the total exchange. On the other hand, the remaining twelve companies attained to meet at least a gain during the trade; Bank Of Baghdad, Union Bank Of Iraq and National Bank Of Iraq leading with a tie of 6.67%.

Insurance

The insurance sector companies that trade on ISX includes; AHliya For Insurance, Al-Ameen Insurance, Dar Al-Salam for Insurance, Al-Hamraa for Insurance and Gulf Insurance and Reinsurance. The table below represents this sector’s monthly security index and their performance valuation that was done at the end of Oct 2014 represented as a percentage.

Price Index – Gain or Loss in Percentage

Companies Closing Index % Change Companies Closing Index % Change
AHliya For Insurance 1.00 0.00% Dar Al-Salam for Insurance 2.00 0.00%
Al-Ameen Insurance 1.90 5.56% Al-Hamraa for Insurance 1.05 1.94%
Gulf Insurance and Reinsurance 0.69 1.47%  

Two of the companies had trade on the market, though, did not gain or loss. The highest performance in insurance sector was achieved with 5.56% and the lowest with 1.47% of their total security index.

  1. Investment

The insurance sector companies include; Al-Ameen Financial Investment, Al-Ayaam for Financial Investment, Al-Batek Financial Investment, Al-Khaima for Finanical Investment, Al-Khair Financial Investment, Bain Alnahrain Investment,  Al-Qum’a for Finanical Investment, AL-Wiaam for Financial Investment, Al-Zawraa for Finanical Investment. The table below represents insurance monthly security index represented as a percentage for the past 5 years.

Price Index – Gain or Loss in Percentage

Companies Closing Index % Change Companies Closing Index % Change
Al-Ameen Financial Investment 1.19 19.00% Bain Alnahrain Investment 1.00 0.00%
Al-Ayaam for Financial Investment 0.62 0.00% Al-Qum’a for Finanical Investment 1.62 9.50%
Al-Batek Financial Investment 0.80 11.11% AL-Wiaam for Financial Investment 1.19 0.83%
Al-Khaima for Finanical Investment 1.00 0.00% Al-Zawraa for Finanical Investment 0.85 5.56%
Al-Khair Financial Investment, 0.40 0.00%      

Three of the companies under investment sector didn’t make loss nor gain on their trade, though, Al-Ameen Financial Investment company did very well by making profit up to 19% of the total. The lowest registered company made a loss 11.11%.

Services

The service companies are as follows; Al-Ameen Estate Investment, AL-Badia for General Trans, Baghdad Motor Cars Servicing, Iraqi for General Transportation, Iraqi Land Transport, Kharkh Tour Amuzement City, Al-Mosul for Funfairs, Mamoura Realestate Investment, AL-Nukhba for General Construction and Iraq Baghdad for General Transport.

Price Index – Gain or Loss in Percentage

Companies Closing Index % Change Companies Closing Index % Change
Al-Ameen Estate Investment 0.48 20.00% Kharkh Tour Amuzement City 6.20 0.33%
AL-Badia for General Trans 1.68 5.00% Al-Mosul for Funfairs 12.15 0.00%
Baghdad Motor Cars Servicing 1.69 9.63% Mamoura Realestate Investment 4.00 6.68%
Iraqi for General Transportation 8.00 10.96% AL-Nukhba for General Construction 0.07 6.67%
Iraqi Land Transport 1.61 2.50% Iraq Baghdad for General Transport 38.91 6.98%
Amuse Ment Town 5.75  

The company under service provider marveled and had 20% gain and a loss of 9.63% from different companies.

Industry

The transport sector companies are; Baghdad for Packing Materials, Baghdad Soft Drinks, Eastern Brewery, ELectronic Industries, Fallujah for Construction Materials, National Household Furniture Industry, Al -HiLal Industries, Iraqi Carton Manufacturies, Iraqi Date Processing and Marketing, Iraqi For Tufted Carpets, Iraqi Engineering Works, Kirkuk For Producing, Al -Khazer for Construction Materials, AL- Kindi of Veterinary Vaccines Drugs, Al-Mansour Pharmaceuticals Industries, Modern Chemical Industries, Modern Construction Materials Industry, Metallic & Bicycles Industries, Modern Sewing, Modern Paint Industries, National Chemical & Plastic Industries, Nineveh Food Industries, North Soft Drinks, Ready Made Clothes and The Light Industries. This is one of the major sector which entails large number of registered companies.

Price Index – Gain or Loss in Percentage

Companies Closing Index % Change Companies Closing Index % Change
Baghdad for Packing Materials 1.66 0.00% Al -HiLal Industries 0.70 0.00%
Baghdad Soft Drinks 2.09 5.37% Iraqi Carton Manufacturies 0.47 2.17%
Eastern Brewery 0.77 9.41% Iraqi Date Processing and Marketing 1.18 9.26
ELectronic Industries 1.60 0.00% Iraqi For Tufted Carpets 3.55 0.00%
National Household Furniture Industry 0.90 0.00% Iraqi Engineering Works 0.99 10.00%
Fallujah for Construction Materials 1.80 10.00% Kirkuk For Producing 1.00 0.00%
National Household Furniture Industry 0.90 0.00% Al -Khazer for Construction Materials 2.30 4.55%
AL- Kindi of Veterinary Vaccines Drugs 1.19 0.85% Al-Mansour Pharmaceuticals Industries 0.69 1.43%
Modern Chemical Industries 35.22 20.00% Modern Construction Materials Industry 0.56 9.68%

Industry sector performed very well with Modern Chemical Industrial with 20.00% and the lowest performance in the market were two companies with 10%.

  1. Tourism & Hotels

The sector of telecommunication has the following that trade on ISX securities; Ashour Hotel, Baghdad Hotel, National for Tourist Investment, Tourist Village of Mosulda, Babylon Hotel, Ishtar Hotels, Karbala Hotels, Mansour Hotel, Palestine Hotel and AL-Sadeer Hotel.

They are listed as follows;

Price Index – Gain or Loss in Percentage

Companies Closing Index % Change Companies Closing Index % Change
Ashour Hotel 8.00 6.67 Babylon Hotel 94.97 1.11%
Baghdad Hotel 10.54 0.00% Ishtar Hotels 40.50 0.00%
National for Tourist Investment 17.00 0.00% Karbala Hotels 1.53 0.00%
Tourist Village of Mosulda 7.00 9.37% Mansour Hotel 27.75 0.89
Palestine Hotel 15.77 1.61% AL-Sadeer Hotel. 30.00 0.00%

 Tourism sector attained the highest profit in by Ashour Hotel obtaining a 6.67%% and the lowest performance recorded by Babylon Hotel at 1.1%.

  1. Agriculture

The companies that trade under Agricultural sector are; Iraqi Agricultural Products Marketing Meat, Al-Ahlyia for Agricultural Production, Iraqi Agricultural Products, Iraqi for Seed Production, Middle East Producing & Marketing – Fish and Modern Animal & Agricultural Production. The table below shows the market indices and the percentage loss/gain companies under Agricultural sector attained.

Price Index – Gain or Loss in Percentage

Companies Closing Index % Change Companies Closing Index % Change
Middle East Producing & Marketing – Fish 8.18 10.00% Al-Ahlyia for Agricultural Production 1.00 0.00%
Iraqi Agricultural Products Marketing Meat, 5.85 1.72% Iraqi Agricultural Products 12.45 0.40%
Modern Animal & Agricultural Production. 0.71 1.43% Al-Therar for Agricultural Production 0.40 0.00%
Iraqi for Seed Production 6.51 0.00%  

One of the Agricultural sector (Iraqi Agricultural Products) made a loss of 0.4% Investment and Middle East Producing & Marketing – Fish company making a profit of 10%. 

Telecom

The Asia Cell is the only listed company within Telecom sectors that trade in ISX. Its monthly index review is represented on the table below.

Price Index – Gain or Loss in Percentage

Companies Closing Index % Change
Asia Cell 12.65 0.00%

The sector of telecommunication maintained their state on the market trading at an index of 12.65 neither making gain nor loosing.

Money Transfer

Money transfer industry entails the following companies that trade on ISX;  Ataa Al-Garri Company for Money Transfer, Harir for Money Transfer , Al Taif Money Transfer, Al-Muhej Money Transfer, AL-Iraqia for Money Transfer, Mouta for Remittance, Sama Baghdad Finance Transfer and United Arab Money Transfer. All the companies within this sector (money transfer) did not participate on trade, therefore, no gain nor was loss experienced.  

Conclusion

As illustrated by Barberis and Thaler (2003), the decisions investors make within the market is very vital and thus, calls for the proper research and study of the market. It is upon the financial administrator to organize for a brief intensive course to the investors to have full information about the market. This will create awareness on crucial decisions on the investment choices made through maintaining the record of investment goals. Other consideration an investor is expected of is to determine when to sell or buy the securities that will bring the highest expected return.

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