The Iraq Stock Exchange (ISX) is one of the growth stories in the Middle East. While the rest of the region’s bourses have crashed as a result of the Arab uprisings and struggle to regain from the dramatic losses, Iraq’s bourse is continuing an upward trajectory.

The Rabee Securities Index, the ISX’s main index has grown by more than 67 per cent since the beginning of the year.

Compared to neighbouring markets, where losses range from 15 per cent for Kuwait, 21 per cent for Muscat and 19 per cent for Bahrain, Iraq is performing well, but its market capitalisation is still primitive in comparison.

The market capitalisation in 2009 was $2.9bn, rising to $3bn in 2010. The market capitalisation at the end of September was $4bn.

The number of shares traded in 2009 stood at 211 billion shares, rising to 255 billion in 2010. As of end-September, 207 billion shares have been traded this year.

Daily turnover ranges from $2-3m.

The ISX is awaiting the mandatory initial public offerings (IPO) of three mobile operators to boost the exchange even further.

There is currently a lack of liquidity on the ISX, but as more companies come to market liquidity will increase, particularly once the mobile operators list their stock.

“The IPOs will establish a new sector on the ISX and will encourage investors in Iraq and also foreign investors to come in,” says Taha Abdul Salam, chief executive officer of the ISX.

It is one of the few bourses without any foreign ownership restrictions, but foreign buyers must execute all transactions via the banks whereas Iraqis can purchase shares by cash.

Foreign purchases have amounted to about $130m over the past 18 months and made up 20 per cent of trading in August , one of the slowest months of the year. Monthly trading volumes have picked up since August to just under $40m.

One of the biggest obstacles to the advancement of the bourse is a lack of organisation and understanding. The regulatory bodies have worked to increase transparency and the ISX has even prevented companies from trading for failing to meet certain requirements.

“We faced many problems from 2005 until 2007, but we did not close the market. We have been tracking investors, making regulations and we have an automated process for trading. We are now in the golden period, Iraq is on the road to stabilisation, investors must understand we are developing,” says Abdul Salam.

The bourse started manually, trading just one session a week up until 2009. There are currently 86 listed companies on the exchange. The banking sector remains dominant in the market, making up about 70 per cent of daily turnover.