Key information in your language

Dear Investors and Friends,

The AFC Iraq Fund was up 1.5% in February, in line with its benchmark, the Rabee Securities U.S. Dollar Equity Index (RSISX USD Index)’s 1.5% increase. For the year, the AFC Iraq Fund is up 1.2%, outperforming the RSISX USD Index’s 0.6% increase.

The market’s action throughout February was that of ticking up higher just as the “beautiful armada” was building up, with the average daily traded value increasing by about 26.5% above January’s low level –yet still about 42.1% below that of 2025– and thus, supporting the assertion made last month in “Equity Market Discounts Regional Tensions”.

Trading on 1^st March 2026, the market’s first trading day following the start of the U.S.-Israel war on Iran, seems to support this assertion further, as the RSISX USD Index was down 1.4% by the end of the day, recovering about half its earlier losses. The daily traded value was up by about 51.3% above the average for February 2026, at about 87.6% of the 2025 average. While prices drifted lower over the next few days, with the index’s 2.2% decline by the end of 4^th March 2026, the market’s action does not match that of panic selling or selling driven by expectations of a war that is devastating for Iraq. From a technical analysis perspective, the decline is viewed in the context of the market pulling back from all-time highs, which, as asserted here often in the past, should be within its multi-month uptrend (chart below).

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

While a few days do not make a trend, nor a month for that matter, especially in this highly fluid and dangerous period, the action of the Iraqi dinar (IQD)’s exchange rate against the U.S. dollar (USD) is in line with that of the equity market. As explained last month, the delta of the parallel market exchange rate over the official exchange rate, has been increasing since mid-December 2025 due to pure domestic reasons related to the government’s implementation and automation of customs tariffs. This meant that the still informal section of importers faced difficulties in effecting cross-border transfers, leading to greater demand for USD in the parallel market, driving the rise of the delta, which continued increasing throughout February. It increased by a mere 2.5% on the day of the war’s start, but has since then declined to levels in line with the trend of increasing delta that prevailed just before the onset of the war (charts below).

Dinar Parallel Market Exchange Rate vs. the Dollar
and its Delta over the Official Exchange Rate

Finally, oil markets, that resumed trading on 2^nd March 2026, in which market expectations for future oil prices, as measured by Brent Futures contracts, spiked significantly as the war progressed; however, the spike is mostly in expectations for the immediate term, and decline meaningfully after that. This change, in context, is evident in comparing the current expectations (orange line in chart below) against the extremely pessimistic ones at the end of 2025 (blue line in chart below), in which the increase (grey bars in chart below) is high in the immediate term but declines meaningfully after that. Moreover, current expectations are very different in scope and shape from those that prevailed following the invasions of Ukraine (red line in chart below).

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

The three markets’ logic, is most likely being that the expansion of the war, the attacks and counter attacks, raised the costs of the war considerably higher for the world at large –the sharp increases in gas prices, the re-routing of trade flows, the rise of fertlizer prices and their effects on food prices– and thus raised incentives for all concerned, direct and indirect combatants, for a quick resolution of this conflict. However, such a resolution is likely to be as badly framed as the reasons for the war’s start were, yet it could postpone a full resolution by a few years.

While being fully cognizant of the geopolitical risks, we remain convinced that the high quality of the fund’s holdings, and their future earnings growth, will drive the fund’s performance irrespective of any volatility that the next few days and weeks might bring. The same holds for the two key dynamics, discussed here often, –the cumulative positive effects of the relative stability and structural banking developments– that are in the early stages of their transformation of the economy, a process that would unfold over the next few years.

However, considerable risks remain, in that this war would escalate considerably beyond the control of participants, direct and indirect, and become an all-out war engulfing the region filled with all the nightmare scenarios that are popping in the media, by experts and “experts”, yet even these seem to be extreme.

AFC Iraq Fund Marketing Information as of 31^st January 2026

Subscriptions

The next cutoff date for subscriptions will be 25^th March 2026. If you would like any assistance with the subscription process, please get in touch with us at This email address is being protected from spambots. You need JavaScript enabled to view it. .

NAV as of 28^th February 2026 and performance table since inception

Regards
 
Ahmed Tabaqchali
Chief Strategist AFC Iraq Fund
This email address is being protected from spambots. You need JavaScript enabled to view it. 
 

Disclaimer:

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.

By accessing information contained herein, users are deemed to be representing and warranting that they are either a Hong Kong Professional Investor or are observing the applicable laws and regulations of their relevant jurisdictions.

© Asia Frontier Capital Ltd. All rights reserved

Privacy Policy