A buyers market? Could the listing of Asiacell on the Iraq Stock Exchange herald the start of something far bigger?

Author:Dudley, Dominic

"THE MOBILE PHONE HAS WEAVED ITSELF into the social fabric of Iraq," says an Iraqi businessman. "The country is still not stable, so it's a way of communicating with relatives or friends. People in places like Baghdad still don't go out much at night."

With incidents like the suicide bomb attack which left at least 22 dead in Taji, north of Baghdad, on 4 February, you can't blame Iraqis for wanting to stay at home and talk on the phone. But as welt as changing the social dynamic of the country, could a mobile operator also now help to change the country's financial and business life too? There is some reason to think so, after the successful listing of shares in mobile operator Asiacell on the Iraq Stock Exchange (ISX) in early February.

The company sold $1.3bn worth of shares, equivalent to 25% of its equity, in what was the largest initial public offering (IPO) ever seen in Iraq. Trading in the shares started on 4 February and rose immediately. They were up 10% on the first day, the maximum allowed under ISX rules. Before the listing, the ISX could almost have served as the definition of a financial backwater. Trading volumes were slim and the 84 listed companies were generally ignored by anyone who wasn't Iraqi and most who were. In December, for example, just $88m worth of shares were traded on the ISX, with 15,000 transactions in which 74bn shares changed hands. Even the much-maligned Nasdaq Dubai market, which is home to just seven companies, managed $150m worth of trades that month.

It wasn't some sort of end-of-year lull on the ISX either. The previous two months had seen even fewer transactions. All that changed with Asiacell's entry to the market. Now, if local stock brokers are to be believed, the company's presence should both encourage more large companies to list their shares and also, perhaps more importantly, attract more international capital to the market.

"Having large companies on the stock market will help us to get the large mutual funds and large sovereign wealth funds into Iraq," says Shwan Ibrahim Taha, chairman of Rabee Securities, which was the sole distributor and selling agent for the IPO. "We're hoping it's going to raise the liquidity on the market. Once it raises the liquidity it will allow the stock market itself to do more things and it will allow us to do more things."

Faruk Rasool, managing director of Asiacell, seemed to take a similar view when commenting after the IPO had concluded. "This was a...

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