Morocco making progress with capital markets reform

Casablanca is preparing to overhaul its
underperforming stock exchange with the aim
of revitalising its capital
markets, writes Paul Melly.

Under the umbrella of a wide-ranging new
stock exchange law, Morocco is about to
launch a comprehensive package of reforms
designed to boost its sluggish capital markets,
opening up new avenues for investment and
rejuvenating the Casablanca bourse as a
vehicle for financing an entrepreneurial private
sector.
Despite its acknowledged success in creating
an increasingly diverse economy with a growing
high tech sector, the kingdom has lagged
behind in the development of capital markets
to match.
“There is a shortage of investors, especially
from outside the country, reflecting a lack of
appetite for Moroccan assets and
opportunities,” says Stéphanie Mery, analyst for
Moroccan banks at &P Global Ratings. “Most
of the indices categorise the country as a
frontier rather than an emerging market.”
A number of factors explain this reticence,
including wider economic or financial
challenges beyond the investment arena. For
example, the exchange regime is not entirely
open and flexible and the range of investment
options has up to now been limited.
“There is a lack of depth in the markets and
90% of funds’ investments are concentrated in
fixed income assets,” notes Mery. “Only 8-9% is
in equities.”