While stock markets fell across Asia, Europe and North America the day before yesterday and the Dow Jones saw its biggest point drop since the September 11 attacks, one stock market just kept humming along-the new Iraq Stock Exchange.
Is the Baghdad-based exchange too battle-hardened to be spooked by a Shanghai sell off or a stray comment from a former Fed Chairman? Or have its traders and investors already priced in so much risk that a 3.3% correction seems so small by comparison that its makes them buy? Or is it just starting so low that nothing makes a difference anyway?
Maybe all three theories are correct. Yesterday stocks climbed strongly on the ISX, as the exchange prefers to call itself. Bank and hotel stocks led the rally.
Still explanations are beside the point. Yes, the market closed sharply up, with gaining stocks outnumbering losing issues by 11 to 8. And that 11:8 figure is not just a ratio, but the actual number of stocks that rose in price compared to those that fell. In all, only 33 stocks are listed on the ISX and not all of them trade every day. Another 19 stocks are expected to be added soon, the ISX web site hints hopefully. Maybe.
The ISX will remain a small, provincial exchange for the foreseeable future. Teheran’s stock market traded nearly 20 times the annual volume ($44 billion) than Baghdad’s ISX ($1.7 billion) in 2006.
Instead, the ISX lumbers forward like all U.S. efforts in Iraq. Enormous strides have been made, but each new achievement somehow fails to impress. The ISX took the place of the Saddam-era Baghdad Stock Exchange, a bad casino that actually managed to lose money. The ISX now has a permanent, purpose-built building and meets more regularly than its forebear. It also has far more transparent rules and modern methods; computer screens have replaced white boards and magic markers. Both in terms of the numbers of stocks traded and the dollar-value of those stocks, the ISX has grown dramatically since it began trading on June 24, 2004.
So far, the Baghdad-based exchange has largely been immune to shocks from the outside world. And that may be problem. It is really not part of the global economy, although the ISX is trying fitfully to join it.
The next time global markets jump off the high dive, let’s hope the traders in Baghdad join them. It will mean that they have arrived.