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Iraq's capital markets show resilience amid regional headwinds
The Rabee Securities Iraq Stock Exchange Index fell 1.1 per cent during the first half of 2025, reflecting regional tensions and dividend-related adjustments. However, the index outperformed Saudi Arabia's TASI (-7.2 per cent) and Bahrain's BHBX (2.1 per cent), while trailing Kuwait's BKP (+17.2 per cent), Dubai's DFMGI (+10.6 per cent), and Egypt's EGX30 (+10.5 per cent).
Half of the RSISX Index companies distributed dividends in the first half, exerting downward pressure on share prices. Bank of Baghdad had the largest impact, offering a dividend yield of 13.4 per cent. Asiacell followed with 11.5 per cent, alongside Iraqi for Seed Production (8.9 per cent), National Bank of Iraq (4.9 per cent), and Mansour Hotel (0.4 per cent). Share price increases in Baghdad Soft Drinks, National Bank of Iraq, and Al-Mansour Bank helped partially offset the broader decline.
The RSISX Total Return Index, which reflects performance excluding the impact of dividend payouts and capital increases, rose 5.9 per cent during the same period—underlining the underlying strength of market fundamentals.
Aysegul Ozge Ozgur, SVP, Head of Research at the Research Department of Rabee Securities, commented: 'The first half of the year demonstrated the market's depth and resilience. While headline figures reflected dividend effects, the core investor story remains positive - anchored by high yields, improving corporate governance, and a maturing institutional framework. We continue to see compelling value in sectors that are adapting well to reform momentum'.
Beyond index constituents, five non-index companies also distributed dividends during the period. Kurdistan International Bank recorded the highest yield at 25.0 per cent, followed by International Development Bank (12.5 per cent), Al-Khatem Telecoms (5.7 per cent), Iraqi Agricultural Products (0.7 per cent), and Babil Animal & Vegetable Production (0.4 per cent).
Total trading volume on the Iraq Stock Exchange fell 38 per cent year-on-year to $150.9 million in the first half. When excluding cross-transactions, the decline moderated to 23 per cent, with adjusted volume at $117.7 million.
The banking sector dominated trading activity with a 70.1 per cent share, followed by industry (12.4 per cent), telecom (9.4 per cent), agriculture (3.6 per cent), services (2.4 per cent), and hotels and tourism (2.1 per cent). Meanwhile, the over-the-counter (OTC) market, which became active in September 2024 and now includes 11 quoted companies, recorded $749,500 in total trading volume during the half.
In total, 22 listed companies recorded share price gains in the first half, with 14 rising more than 10 per cent. Al-Ahlyia for Agricultural Production led with a 120.0 per cent increase, followed by Al-Ameen for Insurance (41.3 per cent) and Kurdistan Islamic Bank (35.3 per cent).
Macroeconomic indicators throughout the first half of 2025 supported long-term market optimism. Iraq launched its National Development Plan (2024–2028) and signed bilateral trade and infrastructure agreements with the UK. In parallel, banking reforms and accelerated digital payment adoption gained momentum. Strategic partnerships were finalized with BP for a $25 billion oilfield development project and Vodafone for the rollout of a 5G telecom operator.
In April, Iraq joined the Tabadul digital trading platform and implemented ESG disclosure requirements for listed companies. The Arab League Summit, hosted in Baghdad in May, coincided with the launch of Iraq's first National Financial Inclusion Strategy and an $848 million investment deal in oil and petrochemicals. In June, the World Bank approved $930 million for a nationwide railway modernization initiative, while the IMF projected Iraq's 2025 GDP growth at 4.1 per cent - among the highest forecasts in the region.
