Identifier
Created
Classification
Origin
09CASABLANCA94
2009-05-15 14:49:00
UNCLASSIFIED
Consulate Casablanca
Cable title:  

A NEW START FOR THE CASABLANCA STOCK EXCHANGE

Tags:  ECON EFIN EINT PGOV MO 
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VZCZCXYZ0000
RR RUEHWEB

DE RUEHCL #0094 1351449
ZNR UUUUU ZZH
R 151449Z MAY 09
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC 8392
INFO RUCNMGH/MAGHREB COLLECTIVE
RUEHMD/AMEMBASSY MADRID 3865
RUEHFR/AMEMBASSY PARIS 0703
UNCLAS CASABLANCA 000094 

SIPDIS

STATE FOR NEA/MAG
COMMERCE FOR NATHANIEL MASON

E.O. 12958: N/A
TAGS: ECON EFIN EINT PGOV MO
SUBJECT: A NEW START FOR THE CASABLANCA STOCK EXCHANGE

REF: 08 CASABLANCA 224

UNCLAS CASABLANCA 000094

SIPDIS

STATE FOR NEA/MAG
COMMERCE FOR NATHANIEL MASON

E.O. 12958: N/A
TAGS: ECON EFIN EINT PGOV MO
SUBJECT: A NEW START FOR THE CASABLANCA STOCK EXCHANGE

REF: 08 CASABLANCA 224


1. (SBU) Summary: The U.S. Consul General in Casablanca met
with the newly appointed U.S. trained managing director of
the Casablanca Stock Exchange (CSE),Karim Hajii, on May 13th
to discuss the loss of consumer confidence at CSE in the
midst of widespread speculation of insider trading and market
manipulation. Hajji spoke of CSE,s new Code of Conduct and
changes within the Moroccan Council for the Code of Ethics in
Securities Markets, the financial sector watchdog. Referring
to efforts to attract more liquidity to CSE, Hajii said, the
Ministry of Finance will need to offer tax incentives for
long term investors and allow other financial instruments
into the market such as short selling and futures. Finally,
he discussed his optimistic vision for financial integration
in the Maghreb region. End Summary.


2. (SBU) Mindful of the limited number of investors in the
country's stock exchange, Hajii outlined his strategy to
increase the estimated 100,000 investors, and in turn bolster
CSE,s liquidity. Engaging Morocco's middle class will be
key, he said. In order to attract investors, Hajii
explained, the Ministry of Finance will need to offer tax
incentives for long term investors and make available other
financial instruments such as short selling and futures to
the public.


3. (SBU) Turning to Initial Public Offerings (IPOs),he
argued that the gloomy financial outlook has led some firms
to cancel or postpone their IPOs. Citing the case of Royal
Air Maroc (RAM),he posited that it would be months before
the airline company would pursue this option. He did confide
that Marsa Maroc, Morocco's largest port operator, is set to
go public in the upcoming months.


4. (SBU) Faced with widespread speculation of insider
trading and market manipulation (reftel),Hajii assured the
CG that concrete steps have been taken to regain consumer
confidence. Specifically, he cited the Exchange,s newly
minted Code of Conduct that prohibits CSE employees from
trading shares in which they have a vested interest. He also
discussed improvements in the Moroccan Council for the Code
of Ethics in Securities Markets (CDVM),which will soon
become independent of the Ministry of Finance. He did,
however, critique Morocco's legal system, under which CDVM is
unable to prosecute individuals for insider trading and/or
market manipulation.


5. (SBU) Active in regional groupings aimed at creating
financial synergies like the Maghreb Businessmen Forum and
the Unified Arab Stock Exchange, Hajii noted that
unfortunately such initiatives have hitherto failed to
generate anything concrete. Having recently participated in
a meeting among North African businessmen in Algiers, he
noted his positive impression of the Algerian business
executives he had met. However, he criticized the Algerian
government, explaining that government regulations that
prohibit 51 percent foreign ownership in a business do not
make business sense. Nonetheless, he firmly believes that
CSE has the potential to become the regional hub for
investment in the continent, noting that the volume of shares
traded in Morocco is the largest in North Africa.


6. (SBU) Comment: The decline in consumer confidence has
created a precarious investment environment at CSE. However,
there are some glimmers of hope as the market is slowly
picking up, in part due to the success of agribusiness
shares, but also in part due to Hajii's leadership and the
renewed confidence in the market that it brings. End Comment.
MILLARD