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Iraqi bourse seeks rebirth after squatters move in

BAGHDAD - A barefoot girl stands in front of the iron gate of Baghdad's shuttered stock exchange, now a home to squatters where shares once changed hands.

Homeless, poor Iraqis took over the old bourse after President Saddam Hussein ordered trading to stop just as US-led forces invaded the country in March.

They settled in, putting up curtains and peeling signs from the outer wall that identified the complex as home to the exchange, where 120 companies were traded.

The unofficial inhabitants of the bourse building are one reason why the US administration and Iraqis who plan to reopen Iraq's stock market, possibly by the end of the year, will have to build it elsewhere from the ground up.

"The first stage will get it up and running with what is available," said Walid Al-Sadoon, one of a group of Iraqi brokers who met an American former stock trader to restart the market.

The US-led Coalition Provisional Authority (CPA) has been running the country since Saddam Hussein's rule was ended in April. It is working with the newly-formed Iraqi Governing Council on a range of reforms.

One of them is dismantling state domination of the economy. The CPA wants ultimately to build a new stock market complex from scratch after deeming the old bourse - with its white boards instead of computers - as unworkable.

The CPA has said Iraqis, who must grapple with a debt estimated at up to $120 billion, should consider foreign investment and privatising state-owned sectors.

Traders said they hoped some state assets would ultimately wind up listed on the bourse and for a computerised system based on transparent Western markets. One said he expected the number of listed companies to roughly double.

They said that under the old system, in which company results were issued only once a year, they often had to drive across the country to track down information by themselves.

"It shall be one of the best stock exchanges in the Middle East," Sadoon said. "There will be a lot of investors: Iraqis, Arabs, foreigners. Privatisation of state companies will go ahead. There will be huge business."

Iraqis say they want reforms as soon as possible as they are anxious to start making money again. They thought having a working stock exchange would send a signal to foreign investors that Iraq's economy was stable.

But it will not be as simple as installing a computerised trading system. Companies will have to be audited, the system monitored and financial results published more frequently and completely.

Traders also expected foreigners, until now barred from buying shares, to be allowed into the market.

Some brokers complained that the Americans were dilly-dallying by insisting on a new building for the market, which one said had a trade volume of $100,000-$150,000 per trading session before the war.

"I have been holding on to this company, which hardly made any profit for the last eight years in anticipation of a day like this. I am hoping (to make money) in a big way, because what is inevitable is that Iraq will move toward a free economy," said Hussain Kubba, a British-educated economist and owner of a Baghdad brokerage.

"We expect Iraq to become a major regional trade centre."

Brokers, complaining that they hadn't made money in months, said some shares were already changing hands again in the absence of a formal market - at prices many times higher than those listed on the last trading day in March.

They said foreigners were among those trying to buy. Iraqis, particularly pensioners, were more than willing to sell.

"We find there are some people in desperate need of money wanting to sell their stock. There are people living on the stock market," said Sadoon, adding that brokers were also grappling with a loss of income since the war. "We are paying a lot of expenses for employees," he said. "We don't have income anymore."