ERBIL, Kurdistan Region - Trading volumes and liquidity in the Iraqi stock market have declined significantly due to the regional tensions and non-compliance with Central Bank of Iraq (CBI) standards, the chairman of the Iraqi Securities Commission (ISC) said Sunday, warning that banks failing to abide by disclosures might be suspended or delisted from financial exchanges.
“Liquidity has been affected by the regional situation, just as all economic sectors have been impacted, including the stock market,” Faisal al-Haimus told Rudaw’s Malik Mohammed, referring to the US-Iran tensions in the region, while reassuring that foreign investors “have not withdrawn their capital and are still investing in the Iraqi stock market.”
According to ISC’s figures, the banking sector accounts for the vast majority of overall trading volume on the Iraqi stock market, frequently comprising over 80 percent of total weekly market turnover. Consequently, actions like suspending non-compliant banks immediately squeeze total market liquidity.
The Iraqi stock market trades over 100 listed joint-stock companies across multiple sectors, including banking, telecommunications, industry, services, and agriculture. Total market capitalization on the market stands around 26 trillion dinars (around $20 billion).
The head of the Iraqi financial regulator specifically pointed to recently placing the US-sanctioned Altaif Islamic Bank under “administration and judicial custody” for 18 months.
“It is not solely international sanctions; there are also internal standards” issued by the CBI, Haimus said, underlining that in addition to the Altafi bank, “four to five other institutions fall into this same category.”
Altaif is among 28 Iraqi banks barred from dealing in US dollars due to concerns over the funneling of USD to Iran and a lack of compliance with Iraqi banking sector reform policies.
It was delisted from engaging in financial exchanges last week and placed under statutory conservator, after the CBI accused it of perpetrating “severe violations that affected the financial center of the bank and the funds of depositors.”
The chairman of the ISC warned “strictly insisted” on the necessity of companies adhering to the required periodic financial disclosures. “But some have failed to comply for various reasons.”
“The Commission takes several measures, including suspending share trading and, in some cases, permanently delisting them from the market. We continue to urge compliance to protect investors' rights and interests,” he added.
Iraq’s economy has been significantly impacted by the drawbacks of the regional conflict that started on February 28, when the US and Israel launched a military campaign against Iran, which resulted in major disruptions to Iraq’s oil exports via the Strait of Hormuz.
Despite Washington and Tehran agreeing to a ceasefire in April and extending it in June, fluctuating tensions have continued over the strategic waterway, through which roughly one-fifth of global oil supplies pass.
Since the war began, Baghdad has sought alternative routes to export its oil, as disruptions to the key waterway have severely affected Iraq’s oil sector and broader economy. The country’s crude production fell from around 4.14 million bpd before the crisis to as low as 1.49 million bpd at the height of the disruption, significantly reducing the country’s export capacity.
