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Iraq: The richest man in Babylon
See page 70.Iraq is the latest iteration of an old story. If the third Baron de Rothschild articulated a theme buy when there is blood on the streets then Iraq is the latest variation on that theme. Heeding Rothschilds advice was immensely rewarding in earlier frontier markets, such as post-WWII Italy and South Korea; in time, the same might be said of Iraqi equities. Few would think of Iraq as being a place worth investing in today given the continued outbreaks of violence,political uncertainty, the legacy of war damage and the persistence of fundamental ethnic divisions within the country. For almost a decade, perceptions of Iraq have been shaped by stories that tell only of the countrys horrors and ignore what we believe is so crucial to understanding the potential of Iraqi equities to undergo a historic re-rating. Iraqi GDP was $88 billion in 2007; the 2012 GDP was $179 billion a doubling in five years. Iraqs oil exports are at an all-time high and the 13% GDP growth this year makes it one of the fastest growing economies in the world. Inflation is under control and the country sits on $47 billion of international reserves, an amount equivalent to 12 months import cover and one that provides the central bank with a great deal of power to defend the dinar should the need arise. The story could not be better. Yet Iraqi equities are given no credit for this objective economic improvement. Posted by: tipper 2013-04-13 |
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