Er­bil Stock Ex­change to launch op­er­a­tions in mid-2014

The Kurdish Globe - - FRONT PAGE -

Ab­dulla Ahmed, Chair­man of the Board of Di­rec­tors of the Er­bil Stock Ex­change ESX, an­nounced at a con­fer­ence on Novem­ber 27 that the stock ex­change is set to launch in mid 2014.

The con­fer­ence was or­ga­nized to dis­cuss the prepa­ra­tions for the launch and was at­tended by a num­ber of rep­re­sen­ta­tives of pri­vate sec­tor com­pa­nies.

Ahmed talked about two sig­nif­i­cant agree­ments the ESX has signed for the pre-launch prepa­ra­tions and man­age­ment of the stock ex­change.

Ab­dulla Ahmed, Chair­man of the Board of Di­rec­tors of the Er­bil Stock Ex­change ESX, an­nounced at a con­fer­ence on Novem­ber 27 that the stock ex­change is set to launch in mid 2014.

The con­fer­ence was or­ga­nized to dis­cuss the prepa­ra­tions for the launch and was at­tended by a num­ber of rep­re­sen­ta­tives of pri­vate sec­tor com­pa­nies.

Ahmed talked about two sig­nif­i­cant agree­ments the ESX has signed for the pre-launch prepa­ra­tions and man­age­ment of the stock ex­change.

“We have signed a con­sul­tancy agree­ment with the Amer­i­can Louis Berger Group, as well as an agree­ment with NAS­DAQ OMEX, one of the world’s largest providers of stock ex­change sys­tems,” he ex­plained in an in­ter­view with a lo­cal Kur­dish daily news­pa­per.

Once launched, ESX would give the pri­vate com­pa­nies the op­tion to sell their shares to the pub­lic and raise funds for their projects and ex­pan­sion plans, while the pub­lic can in­vest their sav­ings in stocks from dif­fer­ent com­pa­nies and re­ceive profit shares. They can also buy and sell stock on the ex­change and profit from th­ese ac­tiv­i­ties.

Think­ing about the first stock ex­change in Er­bil, a num­ber of big chal­lenges come to mind:

One of the ma­jor chal­lenges, ac­cord­ing to Ahmed, is that the ma­jor­ity of com­pa­nies in Kur­dis­tan are lim­ited com­pa­nies which have yet to be­come pub­lic com­pa­nies or cor­po­ra­tions.

Other chal­lenges re­late to con­cerns, shared by the pub­lic and ex­perts alike, about the trans­parency of in­for­ma­tion on the mar- ket.

De­spite the many ben­e­fits ex­pected to ac­cure to the ex­is­tence of the stock ex­change, lo­cal econ­o­mist Ghazi Amandi says that in Kur­dis­tan com­pa­nies “Pay USD 2,000 to an ac­coun­tant to play with their fi­nan­cial re­ports and rev­enue state­ments.”

“This will al­low them to re­port less rev­enue and dis­trib­ute less profit to their share­hold­ers,” Amandi says.

More than 150 com­pany rep­re­sen­ta­tives and econ­o­mists were in­vited to dis­cuss th­ese chal­lenges at the con­fer­ence.

To re­lieve th­ese con­cerns, Ahmed says ESX will be un­der the di­rect su­per­vi­sion of the Iraqi Board of Stock Ex­changes.

“More­over, a Kur­dis­tan Re­gional Gov­ern­ment ( KRG) com­mit­tee will also be au­dit­ing the trans­parency of the mar- ket’s op­er­a­tion,” Ahmed ar­gued. “The com­mit­tee, which will con­sist of rep­re­sen­ta­tives from the Min­istry of Fi­nance, Min­istry of Jus­tice, Di­van of Fi­nan­cial Au­dit, Min­istry of Trade as well as the Fed­er­a­tion of Cham­bers of Com­merce, will mon­i­tor the mar­ket to pro­tect the pub­lic from harm.”

Ahmed added that the mar­ket sys­tem would be de­vel­oped by NAS­DAQ, and that com­pa­nies will be forced to be fully trans­par­ent, have a clear scope of ser­vice and ac­tiv­i­ties, and only be al­lowed to par­tic­i­pate af­ter strict au­dit and in­spec­tion pro­cesses.

Econ­o­mist Dr. Sala­haddin Os­man, how­ever, doubts that lo­cal com­pa­nies, the ma­jor­ity of which are owned by in­di­vid­u­als or fam­i­lies, would share in­for­ma­tion about their wealth and fi­nan­cial sit­u­a­tion with the pub­lic in or­der to par­tic­i­pate on the ex­change.

Dr. Os­man says the ma­jor­ity of the th­ese com­pa­nies’ cap­i­tal is used in trade, con­struc­tion and con­tract­ing, al­low­ing them to earn huge prof­its in short pe­ri­ods of time with their ex­ist­ing cap­i­tal.

“As a re­sult, they are not forced to sell shares and in­volve the pub­lic in their busi­ness and share their prof­its with them,” Dr. Os­man claimed. “I think the ESX would be in­ter­est­ing for agri­cul­ture and in­dus­try, since re­turns on in­vest­ment are not very fast in th­ese sec­tors, and com­pa­nies may need to de­pend on ex­ter­nal fi­nan­cial re­sources, which could be amassed by sell­ing shares to the pub­lic.”

He be­lieves such ven­tures will only suc­ceed when the gov­ern­ment’s poli­cies and strate­gies en­cour­age com­pa­nies to work in the in­dus­trial and agri­cul­tural sec­tors, where “com­pa­nies will be more than happy to par­tic­i­pate in the ex­change.”

The Chair­man of the Kur­dis­tan Eco­nomic Board, Os­man Sh­wani, says they are re­search­ing ways to en­cour­age com­pa­nies to go pub­lic.

“We will soon an­nounce some in­cen­tives for lim­ited com­pa­nies to change to pub­licly-held com­pa­nies and par­tic­i­pate in the stock ex­change.”

Ahmed ar­gues that the stock ex­change can help com­pa­nies make huge in­vest­ments with small in­vest­ments from the pub­lic; in ad­di­tion to ex­pand­ing their busi­nesses, this will help boost the Re­gion’s econ­omy and cre­ate many job op­por­tu­ni­ties for lo­cal peo­ple.

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