KHARTOUM: It takes a special kind of investor to dabble in the stock market in Sudan, a country with an insurgency in the west, a secession in the south and US sanctions everywhere else. That has not dampened the enthusiasm among officials at the Khartoum stock exchange, who hope a switch to electronic trading in June will boost volumes and allow it to expand into trade in gold and foreign currencies. "Once we move from manual to electronic trading, we're going to target new markets like commodities, forex and real estate," said the exchange's General Manager Osman Hamad Khair. Started in 1995, Khartoum's stock exchange trades in company shares, investment funds and Islamic bonds, with all activity designed to comply with strict Islamic principles. The bourse says it racked up record volumes of 2.4 billion Sudanese pounds ($802.7 million) in 2010, and the number of shares traded on the exchange more than doubled to 28.9 million in the first quarter from 12.7 million a year earlier. In a dingy building in the heart of downtown Khartoum, Khair proudly shows off the new trading floor — a hall with a giant electronic board, cubicles with bright orange chairs for traders and a row in the back for investors. The floor has yet to see any action but should flicker to life on June 30 if all goes to plan, says Khair. The switch to electronic trading was initially expected last year but trouble bringing in computer equipment without running afoul of U.S. sanctions caused the delay, he said. Khartoum — an Islamist state that has worked to Islamize its financial system — is classified by the United States as a state sponsor of terrorism. Due to the sanctions, many items like computers and network equipment must be imported from China or other Asian countries at a higher cost. Indeed, Khartoum has lagged behind countries like war-torn Iraq in going electronic. Baghdad's stock exchange switched to automated trading in April 2009. For now, the trading floor is a room tucked away in another corner of the same building, where a crowd of brokers gathers daily for the one-hour trading session from 10-11 am. At a recent session, traders chatted and milled about. A quick scribble with a felt marker on white boards stuck to the walls or propped up on the floor marked the occasional trade. "Right now, one hour of trading is more than enough, but perhaps there will be a pickup in trading when we go electronic," said Mohamed Mahajoob, the official who runs the trading floor. Shahama Dominance Exchange officials say 57 companies — ranging from the Bank of Khartoum to The Sudan Cinema — are listed on the exchange. Banks form the biggest group, with 19 of them listed, including four that are joint ventures with foreign partners. More than 90 percent of trading is in Islamic bonds locally known as "shahama" or government musharakah certificates, which are short-term securities issued by the government to borrow money from the domestic market, exchange officials said. "We trade mainly in shahama and at times in banks," said Salma Mohamed, one of several women brokers on the floor. "Shahama is easy to sell — you can do it anytime. But with companies you may not be able to sell your shares for a very long time. Indeed, trading in some companies is virtually non-existent —like those in the insurance sector, ever since a "fatwa" was issued stipulating that the real owners of insurers were those who held insurance policies. Those who held shares of insurers were deemed speculators, ending any interest in holding shares. Shares in the El Nilein Insurance company, for example, have not traded since April 2, 2009, an exchange official pointed out on the white board in the corner on the floor. When the exchange first started, most of the trading centered around banks and insurance companies, before the focus shifted to the main telecoms company Sudatel and now, to Islamic bonds. With speculation prohibited under Islamic principles, the KSE index was stable at 2,367.9 points at the end of March from 2,361.85 a year ago. But anyone trading in shahama would have had made a 15-17 percent return over the year, Khair said. Either way, anyone investing in Khartoum would have been spared the turmoil from the global financial crisis that rocked markets across the world in recent years. "We didn't suffer at all because you cannot issue Islamic paper unless it is backed by real tangible assets," said Khair. "Our performance before, after and during the crisis was the same."
