April 11, 2006
Baghdad Market: Canaries, Whores and Pimps
There remains something intriguing about the Baghdad exchange. At least for me, having worked through multiple incompleted deals whose ultimate consumation would take place on the Baghdad. An overview of the Exchange 3 years on, when (were it not for the festering and criminal incompetence of the US Administration in all its empty, idiotic posturing) we should have been reading of some contented Iraqis.
Opening with a somewhat down title, our NYT journo informs us that "the bears" gnawing at market confidence.
In Stock Market, the Bears Gnaw at Iraq's Confidence
By EDWARD WONG
Published: April 11, 2006
Welll, gnawing is one way to put it.
For trivial reasons I will note that stock most prominately featured on the board is one I am intimately familiar with, and in fact I know the controlling owner. A most unhappy man, although it is possible all will be ironed out.
This aside, a few useful lessons:
The share value of the Baghdad Soft Drinks Company hovered at 2 dinars. It had not budged in three trading sessions. Mr. Ogaidy sighed. He owns four million shares, worth about $5,400 on that recent morning.
"The prices after the war were so high," said Mr. Ogaidy, who imports Chinese sewing machines. "People were happy, thinking there would be a good economy and stability. But everything happened the other way around."
Which is a colourful way of saying what I said in a recent comment - that the US Administration snatched some semblance of a situation we might call "Not A Total Disaster" from the jaws of defeat and then inexplicably own-goaled it right back into the jaws of defeat, and to add insult to injury, proceded to yammer on for three years about what a great job they were doing except the Left Media was hiding their brilliance. The only item more depressing than this extraordinarily retarded action, is the glee and gusto the retarded sub-literate glee squad of lobotomised "bloggers" picked up and ran with these idiotic, self-destructive pimpery. Good news from Iraq for the slobbering moron intent on willfully self-deceiving himself and contining to live in the gleefully warm little bubble that some "Main Streat Media" is at fault for the same persons sheer gullibility.
But as to Iraq, well nothing particuarly suprising to note, although some turns of phrase do amuse:
If stock markets are any measure of a nation's confidence, then the numbers at the nascent Iraq Stock Exchange show that faith in the country may be at its lowest ebb.
The bear has dug its claws in deep: the market index has lost almost two-thirds of its value in the past year, closing these days below 30, from a high of 74 in March 2005.
The exchange, which opened in June 2004, lists 94 companies, from hotels to date merchants to a maker of animal vaccines. It is perhaps Iraq's keenest expression of American-style capitalism: scores of investors and traders, some in pinstriped suits, others in ankle-length robes and head scarves, gather every Monday and Wednesday.
Analysts and investors rattle off an endless ticker tape of reasons for the downturn: the threat of full-scale civil war, the virulent insurgency, lack of a government, a shaky economy, a dearth of foreign money.
Dearth of foreign money, eh......
The market's free fall is also emblematic of the moribund economy. Though income per capita has risen, some estimates place the unemployment rate at 60 percent.
The growth rate was mired at 2.6 percent last year, and the Bush administration's projection of 10 percent growth for 2006 seems overly optimistic, given the continuing sabotage of oil pipelines, which has shut down exports through Turkey.
One day, I would like to be surprised and run into something that the US Administration churned out with respect to Iraqi conditions that was not complete bollocks.
It still escapes me as to why they never learned, and still have not leanred that Disney Land like Happy Talk doesn't work when the Pirates of the Penzance turn out to be real and have raped the conductor.
Perhaps the notion of an Iraqi stock market is a little premature, because arcane financial laws provide little protection for investors.
Now, as to the surreal
Without a major policy overhaul, investors will shy away and growth will be stymied, said Daniel Speckhard, director of the Iraq Reconstruction Management Office at the American Embassy. Instability has also pushed wealthy Iraqis to send their money abroad.
Yet a sliver of hope remains. More than 100 investors show up for each session.
"We think that one day, the darkness in the market will show some light," said Rone Benham, 45, holding up a pair of binoculars to peer at the figures on the boards. "The prices are so cheap now. With a piece of candy, you can buy 500 shares."
Without a major policy overhaul.
WITHOUT A MAJOR POLICY OVERHAUL?
At the bloody exchange?
Nothing the Exchange dones means fuck all. The exchange should, if it is going to exist, remain nice and basic. Don't let the stupid American sell them on useless bells and whistles or regulations. Just keep costs low, rock bottow low and be ready when stability comes.
After all, a lot of the the lists firms probably will survive. The data is anemic, but not dead:
The market has shown signs of growth, even if it is far from bullish, Mr. Abdul Salam said. Its capitalization is $2.17 billion, small compared to other Middle Eastern exchanges, but up from $1.15 billion at the end of 2004. The daily volume of trade is $2 million to $3 million.
..... Its owners are the country's major banks, and it has a three-member board of governors. The Iraq Securities Commission was recently set up to monitor the exchange and rewrite financial laws to allow foreign investment.
The exchange is also working to connect itself electronically to markets around the world.
"Now we have two challenges — building an electronic system and creating regulations for foreign investors," Mr. Abdul Salam said. "If we have these two in place, and we establish a new government, stock prices will be 10 or 20 times higher by the end of the year."
Typical American idiocy. Make an electronic exchange for.... well no reason at all except that's what modern American exchanges do, and put in "Best Practices" regulations. No insider trading etc. etc.
Nice stuff, I am sure. Mercedes Benz of the East as a platform.
Except of course the Iraqis really just need a crappy little Fiat to see them through.
Above since the Great White Fathers are unlikely to pay the costs of this bullshit.
Exactely the kind of out of the box, works anywhere bullshit advice they're trotting out all over the region. Fucking SEC is fucking everywhere.
Told the bloody Casablanca exchance back in 03 it was going nowhere unless it adopted X, Y and Z US style reforms.
I was so bloody entertained when the market boomed end 03 through 04 and 05.
Yup, going nowhere unless you add in the SEC bells and whistles.
Nice story overall, hope they don't piss their own money away on the American advice for bells and whistles and overly complicated regulations.
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I remember that just prior to the war prices on what was then the Iraqi exchange actually went up.
Made me almost pro-war for a moment there. I had to be amused at the idea that the prospect of a US invasion would actually send share prices up.
Ah, the good old days. I don't know exactly when the moment was that we all knew this was going to go to hell; from what I can recall it was somewhere right around when the realization sunk in that there were never going to be any WMD's, which was a bit after Bremer dissolved the army, I think.
After those two, there hasn't been any daylight since.
Posted by: pantom at April 11, 2006 10:18 PM
Reviewing my old collounsbury commentary suggests by Fall 2003.
The dissolution of the army was ambiguous and I think perhaps too much is made of it. Or made of it in and of itself. In combo with other factors, such as the utter failure to launch a massive public works effort using massive amounts of Iraqi labour.
Posted by: The Lounsbury at April 11, 2006 11:17 PM
Thought I had while commuting home: one of the sad observations on this unbelievable fuckup is that under no conceivable circumstances would anyone's stock market ever again rise in anticipation of a US invasion.
Posted by: pantom at April 12, 2006 09:52 PM
Yes, well, one would have to be quite the contrarian to make that bet again.
Posted by: The Lounsbury at April 12, 2006 09:57 PM