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Declining Share Prices, European Ties Said to be Responsible for Market Shift in Morocco

Declining Share Prices, European Ties Said to be Responsible for Market Shift in Morocco

From Times of Oman

Morocco’s possible demotion to frontier market status next month may deter international investors and put the country’s stock market, already suffering from tumbling share prices and trading volumes, further at risk.

Index compiler MSCI, which has $7 trillion in global assets benchmarked against its indices, put Morocco on review for downgrade to its frontier index last year, and makes its decision on June 11.

Relegation from the emerging market index would reduce foreign investor interest in Morocco, which is suffering from the financial crisis in the euro zone, its biggest trading partner.

It would also be a blow to the country’s pride as it invests billions of dollars to maintain its reputation for relative stability in the politically uncertain Middle East and North Africa region.

“Morocco’s economy is suffering badly due to its close ties with Europe, the market has been penalized with huge pressure on earnings,” said Sebastien Henin, portfolio investor at The National Investor in Dubai.

Some Casablanca-listed banking and real estate stocks were hitting record lows as investors sold shares ahead of the MSCI announcement, he said.

“If the country is taken out of the emerging market index, expect the trackers of the index to leave. In an illiquid market such as Morocco, you could have heavy selling.”

Read more at timesofoman.com