War-torn Iraq recently got an unexpected boost on its way to becoming an investment hot spot, which may take its next step sooner than conventional wisdom suggests.
Even as military forces wage a fierce offensive against ISIS, global ratings agency Fitch upgraded last month Iraq's outlook to stable, based largely on the country's improving public finances.
To be sure, Iraq's B+ credit rating is still deeply entrenched in speculative, or junk territory. The low rating reflects what Fitch analysts called political risk and instability associated with the conflict-ridden country that's "among the highest faced by any sovereign rated by Fitch."
Yet as a marker for big institutional buyers like hedge funds and sovereign wealth arms, Fitch's vote of confidence could mark the start of a broader shift among investors about Iraq's long-term potential. The upgrade could be pivotal for a country still considered besieged, but considered by a handful of savvy market watchers to be a potential diamond in the rough.
"Some analysts say that investors believe that with solid oil reserves and other sectors to build upon, Iraq could have serious growth potential," said Stephen Simonis Sr., chief currency consultant at online currency broker FXDD Global.
"Clearly this can be looked at from either side, as the willing investor will point out the huge risk/reward possibility as the upside is very enticing," Simonis told CNBC. "The doubting investor will say the region remains too unstable and the situation remains far too volatile."