Foreign investment into Iraq is picking up very strongly thanks to growing confidence in the country’s stability and prospects, according to Dunia Frontier Consultants, a financial services company. The first half of 2011 saw $45.6bn in investment, $3bn more than in the whole of 2010, led by South Korean firms which accounted for 24% of the total. Alongside deals to develop its oil reserves, the country is keen to rebuild its inadequate infrastructure and replace slums with modern housing.
While most investment into the country is still direct investment in business ventures and government contracts, foreign investors were net buyers of $72m of shares on the Iraq Stock Exchange in the first five months of 2011, according to the FMG Iraq Fund, one of a number of specialist country funds set up in the last couple of years (others include Merchant Bridge’s Mesopotamia Fund and Godvig’s Babylon Fund). That compares with $53m in the whole of last year. FMG Iraq has done well so far in this boom, up by 25% since launching in May 2010 against around 8% for the MSCI Frontier Markets index. Iraq investments could “make outsized returns over the next five to ten years”, says Johan Kahm, the firm’s founder.