The investment principle of risk and return takes on a entirely different meaning in Iraq. Despite the violent insurgency that's making a hazardous struggle of daily life there the Iraq Stock Exchange has reopened and will welcome foreign investors early next year.
The ABC's foreign affairs editor, Peter Cave, sent this report from Baghdad.
Floor of Iraq Stock Exchange
PETER CAVE:
10 oclock and the ISX is open for business.
The opening bell is a modified house buzzer and the highest technology on the trading floor is a mobile phone and a clipboard. That may be a good thing, because like everywhere else in the country the electricity supply is not very dependable. It was a stock exchange under Saddam Hussein, but it was subject to the whims of the dictator and his family who decided how much share prices could fluctuate and were not beyond creaming off the profits for themselves and their friends by ordering special share issues to line their own pockets. The new exchange is a baby by world standards but it's expanding rapidly.
TRADER ONE: You can sell, buy anything, anything you want.
TRADER TWO: I'm selling Baghdad Azzi and it's a soft drink company.
Female Trader
PETER CAVE: Is trade good today?
TRADER THREE: Yes.
PETER CAVE: Are you making some money? Are you making some money?
TRADER THREE: Making some money?
PETER CAVE: Are you making money?
TRADER THREE: Yes.
Abdul Salam at Stock Exchange
PETER CAVE: Abdul Salam is CEO of the stock exchange which he started up with a grant from the Finance Ministry. He says 65 Iraqi companies will soon have their own whiteboards.
ABDUL SALAM, CEO, IRAQ STOCK EXCHANGE: You see, this is the manual way - each company has a board, the board has two sides, one for sell and the other for buy. That will be all gone when we have an automated system.
PETER CAVE: When do you think that might be?
ABDUL SALAM: In the next year, maybe that will happen.
PETER CAVE: Are you open to foreign traders at this stage?
ABDUL SALAM: We hope so, but we didn't have yet the procedure to arrange their business with us. You know, we must have international banks, we must have international systems, trading systems, depository centre - many things we have to do it before we allow to the foreign people to get here and invest their money.
PETER CAVE: Not all Iraqis though are keen to open the ISX to foreign investors.
PROFESSOR HUMAM AL-SHAMAA, ECONOMIST, BAGHDAD UNI: I don't think at the moment it's a good idea. Because I think it will affect the price of the exchange, of stocks. That will affect also the rate of exchange in Iraq and perhaps the price will be affected. I think we're in a very bad economic situation, we have to wait now. It's early to liberate the exchange, the stock market now.
Oil rig, PETER CAVE: The plum investment opportunity in Iraq is, of course, oil. But, at the moment, the oil industry belongs to the government. And under constant attacks from insurgents, it's in desperate need of renovation - it's a basket case.
PROFESSOR HUMAM AL-SHAMAA: The reality -- the Iraqi reserve is the first in the world. I think it's more highest than the Arab issue reserve. But when the Iraqi reserve will be available to be exported in a level which is appropriate to the level of reserve, it depends on the politics and social and economic factor which affect the stability in Iraq. I think we need more than five years to have real stabilisation, political and economic social stabilisation in Iraq.
PETER CAVE: Are you trading oil at the moment?
ABDUL SALAM: No, not yet. We don't have oil companies.
PETER CAVE: Why is that?
ABDUL SALAM: Because it doesn't established before. Maybe if there is any company established in the next year or after that, we will accept it here.
PETER CAVE: How safe is in investment in Iraq?
ABDUL SALAM: I believe people feeling safe here. In Iraq and in the stock market, we have feeling of fear from something but it's not the usual way. You see, there is different kind of fear outside, but our economy is good.
Chopper in sky
PETER CAVE: Iraq's potential is limited only by the ever-present security situation overshadowing every sector of the economy. Unemployment is feeding insurgency and insurgency is crippling the economic renewal which many believe would bring the insurgency to an end. To be an investor in Iraq requires an ability to see the sunshine beyond the shadows.
Credits:
Reporter: Peter Cave
Camera: Louie Eroglu
The ABC's foreign affairs editor, Peter Cave, sent this report from Baghdad.
Floor of Iraq Stock Exchange
PETER CAVE:
10 oclock and the ISX is open for business.
The opening bell is a modified house buzzer and the highest technology on the trading floor is a mobile phone and a clipboard. That may be a good thing, because like everywhere else in the country the electricity supply is not very dependable. It was a stock exchange under Saddam Hussein, but it was subject to the whims of the dictator and his family who decided how much share prices could fluctuate and were not beyond creaming off the profits for themselves and their friends by ordering special share issues to line their own pockets. The new exchange is a baby by world standards but it's expanding rapidly.
TRADER ONE: You can sell, buy anything, anything you want.
TRADER TWO: I'm selling Baghdad Azzi and it's a soft drink company.
Female Trader
PETER CAVE: Is trade good today?
TRADER THREE: Yes.
PETER CAVE: Are you making some money? Are you making some money?
TRADER THREE: Making some money?
PETER CAVE: Are you making money?
TRADER THREE: Yes.
Abdul Salam at Stock Exchange
PETER CAVE: Abdul Salam is CEO of the stock exchange which he started up with a grant from the Finance Ministry. He says 65 Iraqi companies will soon have their own whiteboards.
ABDUL SALAM, CEO, IRAQ STOCK EXCHANGE: You see, this is the manual way - each company has a board, the board has two sides, one for sell and the other for buy. That will be all gone when we have an automated system.
PETER CAVE: When do you think that might be?
ABDUL SALAM: In the next year, maybe that will happen.
PETER CAVE: Are you open to foreign traders at this stage?
ABDUL SALAM: We hope so, but we didn't have yet the procedure to arrange their business with us. You know, we must have international banks, we must have international systems, trading systems, depository centre - many things we have to do it before we allow to the foreign people to get here and invest their money.
PETER CAVE: Not all Iraqis though are keen to open the ISX to foreign investors.
PROFESSOR HUMAM AL-SHAMAA, ECONOMIST, BAGHDAD UNI: I don't think at the moment it's a good idea. Because I think it will affect the price of the exchange, of stocks. That will affect also the rate of exchange in Iraq and perhaps the price will be affected. I think we're in a very bad economic situation, we have to wait now. It's early to liberate the exchange, the stock market now.
Oil rig, PETER CAVE: The plum investment opportunity in Iraq is, of course, oil. But, at the moment, the oil industry belongs to the government. And under constant attacks from insurgents, it's in desperate need of renovation - it's a basket case.
PROFESSOR HUMAM AL-SHAMAA: The reality -- the Iraqi reserve is the first in the world. I think it's more highest than the Arab issue reserve. But when the Iraqi reserve will be available to be exported in a level which is appropriate to the level of reserve, it depends on the politics and social and economic factor which affect the stability in Iraq. I think we need more than five years to have real stabilisation, political and economic social stabilisation in Iraq.
PETER CAVE: Are you trading oil at the moment?
ABDUL SALAM: No, not yet. We don't have oil companies.
PETER CAVE: Why is that?
ABDUL SALAM: Because it doesn't established before. Maybe if there is any company established in the next year or after that, we will accept it here.
PETER CAVE: How safe is in investment in Iraq?
ABDUL SALAM: I believe people feeling safe here. In Iraq and in the stock market, we have feeling of fear from something but it's not the usual way. You see, there is different kind of fear outside, but our economy is good.
Chopper in sky
PETER CAVE: Iraq's potential is limited only by the ever-present security situation overshadowing every sector of the economy. Unemployment is feeding insurgency and insurgency is crippling the economic renewal which many believe would bring the insurgency to an end. To be an investor in Iraq requires an ability to see the sunshine beyond the shadows.
Credits:
Reporter: Peter Cave
Camera: Louie Eroglu