Are You Ready Yet to Invest in Iraq?

June 17, 2009

A company called Auerbach Grayson is going to be the first US firm to offer access to equities from Iraq to institutional investors.

While I have no interest in Iraq anytime soon and doubt our firm would meet whatever definition they are using for institutional investors, it is still an interesting development.

I found this on Alphaville, which linked to another FT story with a little more detail.

The exchange figures to be fully electronic by the end of June, the Iraqi market is 60% financials (repeat theme: every country has a big bank or two). I was able to link through to a page that tells the schedule for moving Iraqi stocks to electronic trading, and while I do not know if the list of companies is comprehensive or not, it is interesting to look at.

As you think about Iraq, what do they need? Where is money very likely to be spent? I would think food, healthcare and rebuilding things (it would seem they will continue to outsource a lot of their security needs for a while). Included in the first batch of stocks to move to the electronic platform are Iraqi Agricultural Products Marketing, National Food Industries, Fallujah Construction Materials and Iraqi for Seed Production. The second batch is mostly financial stocks but also Al-Mansour Pharmaceuticals Industries. I also saw a bicycle company, a sewing company and a rug company in the listings.

Auerbach Grayson will be providing research on Iraqi companies to its clients, but I think it would be much easier for them to offer some sort of index fund (maybe they will) to its clients instead. Would it be truly shocking to find out that the Al-Ayam Financial Investment company (real company) turned out to be headquartered on the wrong streetcorner (made-up example)?. An extreme outcome (either up 1000% or complete eradication) is probably a good bet.

The observations above about money being spent on food and healthcare, etc., are fairly obvious, even if not complete; the money is going to be spent. That does not have to mean that the stocks do well for all sorts of reasons that could be top-down, bottom-up, or both.

Again, I'm not looking to buy into Iraq, but this market, as will be the case with others, will open to US investors in the future. It doesn't hurt to see what comprises a new (to you) market and spend a few minutes learning you are unlikely to buy a certain country, because you will increase your general knowledge - and occasionally you will find a market that you do want to invest in.

http://seekingalpha.com/article/143835-are-you-ready-yet-to-invest-in-iraq

Thanks Dry, I'm in.
LIT

An interesting video report today from CNBCs reporter Erin Burnett interviewing David Grayson, Grayson Auerbach Managing Director/co. founder on investing in Iraq. Any thoughts, comments?

http://www.cnbc.com/id/15840232?video=1161651312&play=1

[b] Hey day dreamer, great avatar tweede bird was always one of my fav. have a great day.