October 24, 2004

SHORTING FEAR, LONG ON HOPE:

Fear Yields to Hope on This Big Board: Investors brave risks -- physical as well as financial -- at Iraq's reborn stock exchange. (Thomas S. Mulligan, October 24, 2004, LA Times)

When the exchange reopened in June after a name change and a 15-month hiatus for war, Abdul-Salam and other ISX officials were so afraid of attack that they admitted only 20 investors — and no reporters. Since then, holding their breath, they have allowed the crowd to expand to as many as 250 for each two-hour trading session. There's no telephone or computer trading, so if you want to play you have to come in person.

"We'd have 1,000 if I'd let them in," said Abdul-Salam, former research director for the ISX's predecessor, the Baghdad Stock Exchange.

The security fears are pushing the exchange's crash program to shift to a purely electronic marketplace, like the Nasdaq Stock Market, by year's end. In technological terms, it means leaping to the 21st century from the 19th, with its yelling crowd of Iraqi investors, trades scrawled on grease boards, mandatory hand-signed stock certificates and multiple paper records trailing every transaction.

It has to be done because it is too dangerous for the heart of the nation's investment community to be so exposed, even if for just two hours at a time.

"We're talking about the economy of Iraq," declared Mohammad Sadr, a financial consultant to the exchange.

Sadr's claim may sound overblown, considering that the total value of shares changing hands in an ISX session averages $1.5 million — about what the New York Stock Exchange turns over every three-quarters of a second.

Oil, public utilities, mining and other key sectors are a long way from being privatized, let alone forming companies and listing shares on the stock exchange. But to Sadr and other believers in free-market Iraq, the institutions and habits of capitalism ought to be in place when that day arrives.


And the day will arrive.

Posted by Orrin Judd at October 24, 2004 11:07 AM
Comments

People who have Iraq's best interests at heart -- don't include me among them -- might contemplate how useful it was to Russia to have these instruments of capitalism in place, even though the products of capitalism were not being produced.

Or, at least, ask themselves, what did Russia need in the immediate aftermath of the collapse of the Bolsheviks -- a fully automated stock exchange in Moscow, or better farm-to-market roads?

We know which they got.

Posted by: Harry Eagar at October 24, 2004 1:57 PM

Both Afghanistan and Iraq are getting better farm-to-market roads, both literally and the equivalent, in other infrastructure.

Posted by: Michael Herdegen at October 24, 2004 3:55 PM

That's beyond pathetic, Harry. We all know how you must regret that the Bolsheviks did collapse, but collapse they did, after spending four decades systematically reducing their country to rubble both physically and culturally. That civilization doesn't recover overnight after your heroes have had their way with it is a mystery you might at least want to ponder.

Posted by: joe shropshire at October 24, 2004 5:42 PM

Seven decades.

Posted by: joe shropshire at October 24, 2004 5:44 PM

Are they, Michael? I missed that.

Posted by: Harry Eagar at October 25, 2004 12:28 AM
« SOMETIMES THE PEN CUTS LIKE JUSTICE: | Main | NEVER IN DOUBT: »