Iraq Stock Exchange continues to surge

By Greg Richards

The Iraq Stock Exchange appears to trade twice a week. It has closed for today, (Thursday March 22, 2007).

It surged again yesterday, up 2.27%. Stocks are, of course, dicey things. Were the Iraq Stock Exchange more a part of the large international markets of New York, London and Hong Kong, for instance, a short-term move in the stocks would not contain much information about local conditions. Stock prices are affected by the prospects of individual companies, but also by global liquidity, expectations for growth or lack thereof, changes in the discount rate and so forth.

But in a market as small and illiquid as the Iraq Stock Exchange, and with the country in such a military, political, economic and social crisis, we can reasonably suppose that the level of stock prices is a useful tile in its mosaic.

With that thought in mind, it is somewhat counter-intuitive that the ISX - the Iraq Stock Exchange Index - would be surging here. Today's level of 28.308 represents a gain of 8% from the beginning of March. It is a gain of 11% since the beginning of the year. It is a gain of 12% from the correction low of early December, which was the period of bad news after the second wave of violence in Baghdad and while president Bush was reevaluating our strategy and leadership.

How will the situation in Iraq work out? There are a lot of vectors. The military situation in Baghdad seems to be responding to our new strategy - General Petraeus in charge and the surge of troops. Can this be expanded to a political settlement and participation and leadership by the Iraqis in security, economic and infrastructure activities? We don't know at this point.

The surge in the ISX is a vote for a positive future for Iraq. It is something we want to be aware of as citizens as we evaluate our support for our ongoing effort there.