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After a massive rally at the end of last year, the ISX turned sour and nosedived in tandem with oil prices and global stock market. Within the RSISX index almost no stock was spared during the quarter, with blue chips Kurdistan International Bank down -25%, Asiacell -25% and Bank of Baghdad -30%. At the closing of the quarter the index traded at its lowest point ever recorded since inception back in 2010. To say the least, share prices are extremely depressed as the lack of liquidity in the system continues to plague the market and an extra layer of pressure was added due to foreign selling. Core holdings in the fund have however reported less gloomy numbers as of lately. Despite the hardships in Iraq, Baghdad Soft Drinks managed to grow sales by +14% and operating profit by +60% in 2015, and Mansour Bank announced a dividend of almost 7%. Security in Iraq continues to improve as ISIS have been pushed on the defensive. The international coalition claims that they have liberated about 50% of the territory controlled by ISIS in Iraq, and emphasized that the group has not made any progress since last May. The last remaining strong hold is Mosul and Iraqi troops are closing in on the city. Several villages south of Mosul have been cleared of ISIS fighters. The liberation of the city of 2.5 million people will be a great boost to sentiment and will put an end to ISIS influence in Iraq. Despite depressed oil prices, the Iraqi oil sector continues to expand. A report by Rystad Energy shows that Iraq has the world’s third-lowest-cost crude oil. The Iraqi oil minister has said that the average cost of extraction in southern Iraq, where most of the oil fields are located, is about $10 per barrel. The United Kingdom is the most expensive at $52 per barrel, followed by Brazil at $49 and Canada at $41. Sources: Iraqi News, Rystad Energy, Bloomberg

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