Last year saw the Casablanca Stock Exchange listing more companies and increasing share prices. Financial analysts expect the growth to continue this year, reflecting increased confidence in the Moroccan economy.
By Mawassi Lahcen for Magharebia in Casablanca -- 05/01/07
[Mawassi Lahcen] The chairman of the Casablanca Stock Exchange rings the bell after the listing of a new company.
The Casablanca Stock Exchange experienced unprecedented activity in 2006, with the number of transactions on the retail market for Moroccan shares reaching 117.4 billion dirhams -- an increase of 212.9% from 2005.
Some 200,000 Moroccans trade shares on the stock exchange. In 2006, they traded 128.8 million shares, an increase of 64.13%. The share prices of 45 companies rose by high percentages, causing the Moroccan All Shares Index (MASI) to increase by 71.14%.
The exchange's year-end capitalisation was 417.09 billion dirhams, an increase of 65.32% from 2005. The volume of the capitalisation of the Moroccan stock market was equivalent to 83% of Morocco's gross national product.
The rise in the stock exchange's indices reflects the confidence in Moroccan economy, which is expected to have grown by 7.3% for 2006, Upline Securities Bank General Manager Rachid Alaoui said. The indices were also affected by better than expected half-year results of listed companies, which showed an increase in combined net profits of 35%.
Alaoui also attributed the rise in Moroccan share prices to a substantial increase in cash liquidity, resulting from privatisation revenues, an increase in remittances from workers abroad, tourism revenues, and the influx of foreign investment -- particularly from Europe and the Gulf states. The increase in liquidity caused a fall in interest rates to the lowest-ever level in the country, which made investors prefer to invest their funds in shares instead of bonds.
Alaoui says he does not expect any significant drop in share prices and says the upward trend should continue through this year, with many new companies joining the exchange. During 2006, 7.1 million new shares were listed on the stock exchange at a value of 7.2 billion dirhams.
Abdelaziz Lahlou, a senior financial analyst at the Attijariwafa Bank's brokerage subsidiary firm, told Magharebia that there will be a corrective fall in the prices of certain shares which increased in an exaggerated way over the past year. However, he does not expect there to be a major collapse in the market.
Casablanca Stock Exchange Organisation and Information Systems Director Omar Drissi Kaitouni said the developments in the Moroccan stock market reflect the new role that the stock exchange is playing in the national economy. He said the reform of the stock exchange, which has now entered its tenth year, has borne fruit, and is contributing in a more efficient way to mobilise savings, attract foreign investment and finance the national economy.
Moroccan authorities have been implementing a series of measures to modernise and reform the financial market. At the end of 2006, the Moroccan Parliament ratified new laws regulating the publication of information related to listed companies, ensuring market transparency, and protecting the rights of those dealing in the market. Preparations are under way to introduce futures transactions.