Iraqi stock exchange small but surging

BAGHDAD -- Looking for a place to put your money amid the turmoil on Wall Street?

Consider, um, Iraq.

Iraq's fledgling stock exchange has increased 25% this year as improved security fans hope for an economic revival here.

Trading volume is small, often less than $1 million a day compared with more than $100 billion a day in the United States. Few Westerners have dared to invest, but the optimism among locals is palpable.

Investors "see the end of the tunnel," says broker Ali Hassan Ali. "They see Iraq becoming good."

Among the 94 companies listed on the Iraqi Stock Exchange are banks, insurance firms, manufacturers and a movie production firm. Hotel stocks led the latest rally on the belief they will be among the first Iraqi companies to attract foreign investment.

The market bustles with traders, who cradle cellphones on their ears and scribble contracts on white boards. There are plans to automate trading, but for now the manual process is ideal — it's not vulnerable to Baghdad's frequent power outages.

Although the ancient Babylonians were the first to create markets for stocks and bonds, trading is still a novelty in modern Iraq. The current exchange was only opened in 2004, and for a while it was housed in an abandoned hotel restaurant. Even now, the market is almost as popular among idle retirees as serious investors.

Many in the crowd toy with worry beads and watch the action on the floor while dabbling in just a little trade.

"My wife asked me not to go anymore," says Abdul Sattar Jubari, 61, a retired schoolteacher. He ignored her. "It's become a habit, like smoking."

The market is dominated by a handful of wealthy Iraqis, many of whom live outside the country and call in their orders by phone to brokers, says Taha Abdul Salam, the exchange's CEO. Foreign investors account for less than 20% of activity.

U.S. officials hope the market will expand. June Reed, a U.S. economics adviser, says a healthy exchange could serve as one of the mechanisms used ultimately to privatize state-owned companies and help attract foreign investors.