In the first quarter the Iraqi market, as measured by the Rabee Index, increased by 16.7% which was in sharp contrast to the relatively modest returns in global markets. ISX year-to-date returns are one of the strongest registered by any market, but intra quarter volatility was huge, with the market initially plunging 6% before staging a very convincing rally. The average daily turnover for the quarter improved by over 100% compared to 2020. Foreign buying activity has also picked up somewhat and they remained mostly net buyers throughout the period. The rally was supported by higher oil prices, but as we have pointed out previously the short- and medium-term correlation between ISX and the price of oil is low. When the ISX hit its low in January, oil prices had rallied almost 8%… Encouraging news flow, positive corporate activities and numerous strong corporate results, especially in the banking sector, where the main drivers of the bullish market moves.

On the earnings front we digested solid results from a number of blue-chip companies. Our long-term holding, Baghdad Soft Drinks, managed to grow pre-tax earnings by 20% and revenue by 13% in 2020 despite the difficult environment caused by the pandemic. Bank of Baghdad reported deposits growth of +33% and net income +177% for FY20. A number of major Iraqi companies reported healthy dividend pay outs of around 5-10%. With this encouraging backdrop we believe that the bullish market trend is likely to continue over the coming quarters.

Source: CBI, Bloomberg, RS

Domicile: Bermuda
Sources: Bloomberg LP, Rabee Securities