In the 4^th quarter the Iraq Stock Exchange sustained its rally as investor sentiment continued to improve. The market was mainly driven higher by local buying but foreigners were once again net buyers in the market after being net sellers for two consecutive years! Another sign of strength was that volumes were sharply on the rise, however they are still but a fraction of the levels prior to 2014.

The year started on a bearish note as oil was trending sharply lower and experts around the world where trying to outbid each other on how low it would go. Iraq´s economy which was already strangled due to the costs of the war against IS, was further damaged by the fall in price in its main commodity. As the government cut back on expenses Iraq was drained of liquidity and the locals who account for the great majority of the volume on ISX remained absent. The local index was down as much as 41% ytd at the through in May 2016 before rebounding. We turned bullish in Q2 as the outlook for Iraq was improving and we were correctly fully invested and focused on our core positions in the fund. As oil prices were trending higher and the market was seeing an end to the fight against IS, stocks started to rebound sharply during the second half of the year, and the momentum has continued into the new year. We expect to see a strong rebound of the Iraqi economy in 2017 and coming off a low base after 3 consecutive years of declines, the stock market has just begun to make headways.