In the fourth quarter the Iraqi market, as measured by the Rabee Index, decreased by 5% which was in sharp contrast to the broad-based global rally. We were not too happy witnessing the disparity, but ones again it proves that the ISX remains one of the few uncorrelated equity markets left in the world.

In local currency the market had a decent quarter but in December the central bank decided to devalue the Dinar by around 20% in an effort to stem dwindling FX reserves as oil production and oil prices have remained muted. Market volumes remained sluggish as the market continued to trade near its decade lows. However, it has been encouraging to see foreigners on the buy side for several months in a row as well. Perhaps the ISX has discounted all imaginable future negative events after a 7-year bear market… Perhaps investors see an attractive risk reward in the market when most global equity markets are priced to perfection…

Despite another weak quarter there are some very encouraging signs in the corporate sector, especially in the heavy weight banking sector which has rebounded sharply. Bank of Baghdad´s most recent quarterly report shows that their deposit base is once more growing and bottom line growth improved by 76% y/y. Blue chip telecom operator Asiacell also surprised the market reporting a net profit growth of +32% y/y and Baghdad Soft Drinks continues to deliver impressive results (FY20 sales +14% y/y) despite a very difficult year. These are all good indications that we might have a few strong quarters ahead for the ISX.

Source: CBI, Bloomberg, RS

Domicile: Bermuda
Sources: Bloomberg LP, Rabee Securities