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Dear ,

The AFC Iraq Fund was up an 3.9% in November 2025, underperforming its benchmark, the Rabee Securities U.S. Dollar Equity Index (RSISX USD Index), which was up 5.0%. For the year, the AFC Iraq Fund is up 16.4%, outperforming its benchmark’s 11.2% increase.

The market was indifferent to the elections, and to expectations of violence or disruptions, as volumes picked up moderately for the month. The RSISX USD index attempted a break-out of the consolidation range that it traded in since December 2024, following a blistering 35.9% three-month rally. While volumes were positive, they were not high enough to support a full break-out. Nevertheless, the market’s technical picture continues to remain positive and still suggests that the consolidation phase would continue and that the likely consolidation or pullback should be within its multi-month uptrend (chart below).

Rabee Securities U.S. Dollar Equity Index and Daily Turnover

The RSISX USD Index’s constituents’ performance were mostly positive, with six stocks up, two stocks flat, and two stocks down. Positive performances were led by National Bank of Iraq (BNOI) and Iraqi Islamic Bank (BIIB), both up 10.3% for the month, followed by Asiaell Telecom (TASC) up 7.3%, Baghdad Soft Drinks (IBSD) up 4.5%, Bank of Baghdad (BBOB) up 2.1%, and Al-Mansour Bank (BMNS) up 0.5%. Both Baghdad Hotel (HBAG) and Al-Mansour Hotels (HMAN) were flat, while negative performances were led by Commercial Islamic Bank of Iraq (BCOI), which was down 2.9%, followed by Al-Mansour Pharmaceuticals Industries (IMAP) down 2.4%,

The parliamentary elections on 11^th November 2025, the sixth such elections since the U.S. invasion in 2003, were mostly greeted by the market as a non-event; crucially, they were peaceful with no indications of a repeat of the political violence that followed the prior elections in October 2021. Their results, however, suggest that the processes of government formations following the election, while unlikely to repeat the political stalemate following the 2021 elections, yet much like them would extend over many months.

The current political, societal and economic scene is very different from that of 2021; the country is enjoying the fruits of three years of solid stability and strong economic growth. However, unlike in 2021, the upcoming government does not have the benefits of the huge budget surpluses of 2021-22 that allowed the current government to introduce the expansionary three-year budget of 2023-25. The cyclical positives that supported the budget’s revenues will become negatives in the different oil price environment, and thus the tailwinds of prior strong oil prices are reversing into headwinds over the next 9-12 months. Current expectations for weaker future oil prices, as measured by Brent crude prices, suggest that prices over the next two years would average 18% less than the average of the prior two years (chart below).

Market Expectations for Future Oil Prices
As measured by Brent Futures Contacts (USD per barrel)

Countering these cyclical negatives are the positives of the secular transformation of the Iraqi economy, driven by the two key dynamics discussed here often in the past, the cumulative positive effects of the relative stability and structural banking developments. These are in the early stages of their transformation of the economy, a process that would unfold over the next few years, bringing with them high economic growth that would feed into higher corporate profits, and ultimately higher stock market returns. Consequently, while the positives of secular transformation of the economy should trump the cyclical negatives, these cyclical negatives would dampen the growth of non-oil GDP and corporate profits.

The interplay of the secular positives of the economic transformation of the economy and the cyclical negatives of the current low expectations for oil prices was the subject of two recent webinars:

• Majlis and Markets, 1^st December 2025: "Iraq’s Economy: Progress or Pressure?"
• AsharqNow, 28^th November 2025: "The Iraqi Banking Sector: A Weak Link or a Starting Point?: القطاع المصرفي العراقي.. حلقة الضعف أم نقطة الانطلاق؟"

We continue to believe that the fund’s holdings stand to capture these returns in the next few years in the same way that they did in 2023, 2024, and year-to-date 2025.

Note:

* The green line denotes actual Brent prices, the yellow line denotes current expectations of future Brent prices, while the red and grey lines denote prior expectations for future Brent prices that marked the upper and lower ranges for such expectations over the last four years.

AFC Iraq Fund Marketing Information as of 31^st October 2025

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NAV as of 30^th November 2025 and performance table since inception

Regards
 
Ahmed Tabaqchali
Chief Strategist AFC Iraq Fund
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This Newsletter is not intended as an offer or solicitation with respect to the purchase or sale of any security. No such offer or solicitation will be made prior to the delivery of the Offering Documents. Before making an investment decision, potential investors should review the Offering Documents and inform themselves as to the legal requirements and tax consequences within the countries of their citizenship, residence, domicile and place of business with respect to the acquisition, holding or disposal of shares, and any foreign exchange restrictions that may be relevant thereto. This newsletter is not intended for distribution to or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law and regulation, and is intended solely for the use of the person to whom it is intended. The information and opinions contained in this Newsletter have been compiled from or arrived at in good faith from sources deemed reliable. Opinions expressed are current as of the date appearing in this Newsletter only. Neither Asia Frontier Capital Ltd (AFCL), nor any of its subsidiaries or affiliates will make any representation or warranty to the accuracy or completeness of the information contained herein. Certain information contained herein constitutes “forward-looking statements”, which can be identified by the use of forward-looking terminology such as “may”, “will”, “should”, “expect”, “anticipate”, “project”, “estimate”, “intend”, or “believe” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance of Funds managed by AFCL or its subsidiaries and affiliates may differ materially from those reflected or contemplated in such forward-looking statements. Past performance is not necessarily indicative of future results.

The AFC Iraq Fund is registered for sale to qualified/professional investors in Japan, Singapore, Switzerland, the United Kingdom, and the United States. The Fund has appointed Acolin Fund Services AG, Maintower, Thurgauerstrasse 36/38, 8050 Zurich, Switzerland, as its Swiss Representative. NPB Neue Privat Bank AG, Limmatquai 1 /am Bellevue, CH – 8024 Zürich, Switzerland is the Swiss Paying Agent. In Switzerland, shares shall be distributed exclusively to qualified investors.  The fund offering documents, articles of association and audited financial statements can be obtained free of charge from the Representative. The place of performance with respect to shares distributed in or from Switzerland is the registered office of the Representative.

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