Middle East unrest to hit Morocco bourse IPOs

Protests sweeping the Middle East and North Africa may have diminished the prospects for more initial public offerings (IPOs) on Morocco's bourse this year, its chief executive said on Thursday. Morocco wants to double the number of companies listed on the Casablanca exchange by 2015 and triple the number of private investors to about 500,000 to become Africa's second-ranked stock market after South Africa.
"Our objective was to have seven (IPOs), but given the difficult conditions in the region I cannot say we'll have seven," Chief Executive Officer Karim Hajji told Reuters in an interview. "We'll have a few IPOs I'm sure, but how many I'm not certain," he said on the sidelines of a Thomson Reuters Africa investment conference.
Protests fuelled by poverty and a lack of democratic freedoms have ousted long-serving rulers in Egypt and Tunisia and triggered a violent crackdown in Libya, which in turn has prompted international military intervention. Thousands of Moroccans last week took to the streets to demand more civil rights and an end to corruption in the North African country where the king this month promised constitutional reform.
Such unrest has prompted some foreign investors to pull funds from Moroccan stocks. Foreign investors hold about 2 percent of the bourse's $85 billion market capitalisation. "We've had a drop in volumes coming from foreigners as they tend to look at the whole area as a bloc, which it is not," Hajji said. Investors should take heart from the fact that Casablanca's bourse has not closed for a single day, he said. In contrast, Egypt's exchange shut for more than seven weeks due to political turmoil.
Morocco's all-share index has traded flat this year, compared with Egypt's broad index that has shed more than 30 percent of its value since the start of the year. Hajji said the exchange continued to target small and medium companies for listings, despite the tough environment. "We are looking at listing more and more SMEs (small and medium-sized enterprises). We do have some large corporations but the bread and butter of the Moroccan economy is the SME," he said.
CNIA Saada, Morocco's fourth biggest insurer, and Tunisian car retailer ENNAKL Automobiles both listed on Casablanca's bourse last year, ending an 18-month drought. Lack of liquidity remains the Casablanca bourse's main weakness as it seeks to expand in Africa and attract foreign companies, Hajji said. "The big challenge for us is to improve liquidity. The free float on our exchange is not developed enough and that's why we're looking at the development of ETFs (exchange traded funds) as a way to improve liquidity."