Morocco : Casablanca Stock Exchange narrowly avoided a crash, new study reveals
The Casablanca Stock Exchange (BVC) narrowly avoided a crash, says consulting firm Cejefic in its new report, based on responses from the management of the 500 most successful companies in Morocco.The Casablanca Stock Exchange (BVC) narrowly avoided a crash, says consulting firm Cejefic in its new report, based on responses from the management of the 500 most successful companies in Morocco.
The company stated that the BVC was hit by economic hardship, lack of confidence, a gradual outflow of foreign investors and especially by a liquidity shortage which eventually suffocated the financial market.
This study, commissioned by the BVC,
states that volumes fell by nearly 70 percent on the Casablanca Stock Exchange between 2007 and 2013, after being temporarily boosted by new introductions on the market and the presence of foreign investors, newspaper Libération reports.
These low volumes have resulted in a lack of liquidity on the market which impacts prices and prevents investors from diversifying their strategies.
Director of Consulting at Cejefic Brahim Sentissi believes that "the lack of liquidity is a factor that blocks the implementation of new products and foreign investment". He added that there is a "real risk when it comes to liquidity on the market, with significant potential costs".
To remedy this situation, Cejefic recommends improving the floating, particularly through an increase of listed companies as well as a segmentation of the market into two blocks, with a compartment dedicated to small and medium-sized enterprises (SMEs).
The firm also recommends authorising new financial products and practices such as short selling.
The country's financial authorities are also considering several actions to develop the exchange of the country. According to African Economic Outlook, the operators in the SME sector and the ministry of the economy and finance should shortly be holding discussions with a view to making it easier for SMEs to gain access to the capital market, the aim being to create a specific stock market for them.