Casablanca Inventory Change rides wave of World Cup optimism

The Casablanca Inventory Change (BVC) has strengthened considerably over the previous two years, argues CEO Tarik Senhaji. The whole market capitalisation of firms listed on the bourse stood at $92.5bn on the finish of March, a 43% surge from $64.6bn on the finish of 2023. Inventory buying and selling volumes have greater than doubled prior to now yr and a number of other firms have capitalised on the bullish temper to lift fairness capital on the change, he says.

“Final yr was one of the best on document in 15 years when it comes to volumes traded, participation of institutional and retail traders, worth efficiency, and the capital raises we facilitated,” says Senhaji. He tells African Enterprise that this momentum has carried on into 2025, with buying and selling volumes remaining elevated within the first quarter.

Senhaji attributes the surge in inventory market exercise to an acceleration in capital flows within the Moroccan financial system, arguing that investor confidence has risen lately on account of the dominion’s improved financial prospects.

“We’re witnessing fairly a turning level when it comes to the event of the Bourse de Casablanca. There may be a number of confidence within the enterprise neighborhood and the change is right here to translate that into transactions,” he says, citing the 2030 World Cup as one of many main drivers of elevated capital flows into the Moroccan financial system.

World Cup galvanises infrastructure

For the reason that worldwide soccer federation FIFA introduced in October 2023 that Morocco would host the World Cup alongside Spain and Portugal, there was a brand new wave of private and non-private investments in sectors of the financial system to assist the dominion’s preparations for the video games. Infrastructure growth has emerged as a very sturdy driver of latest investments, Senhaji reveals.

“We not solely have the World Cup in 2030. We even have the high-speed rail from Tangier, which was launched by His Majesty the King, and connects via Rabat to Casablanca.

“It’s now being prolonged all the way in which all the way down to Agadir. Meaning extra funding, extra alternatives for firms, and extra flows into the financial system.”

“That funding velocity and that turnover of money is essential. We finance professionals have an interest within the velocity of cash moderately than the mass of cash. When you’ve got a giant mass of cash however it’s not shifting, it’s not producing wealth. The advantage of Morocco is that there’s a lot of velocity when it comes to funding flowing into the financial system,” he says. He argues that investor confidence has additionally been bolstered by a shift in macroeconomic coverage. “We beat inflation and that gave the central financial institution room to chop charges earlier this yr.

“Decrease rates of interest imply companies can borrow cheaply and make investments, in order that’s conducive to extra funding. That augurs properly for the change.”

Corporations money in

Senhaji argues that the enticing fundamentals of listed firms have helped help stronger valuations available in the market. Elevated share costs have in flip inspired extra firms to contemplate elevating capital on the inventory market.

“The nice outcomes of listed firms final yr drove curiosity within the bourse. Listed firms noticed their earnings enhance on common between 7% and 10%. Corporations are reaping the rewards of their investments, so they’re soliciting our market extra,” he says.

“In our main markets, we had yr in 2024, with greater than 7bn Moroccan dirham ($766m) raised. This consists of one IPO [initial public offering] but additionally many capital will increase for firms who wish to put money into their companies they usually go to the market to lift extra funds via fairness,” he provides.

Among the many Moroccan firms which have listed is CMGP, a pan-African agri-tech firm working throughout 5 international locations in North and West Africa. The corporate’s IPO, which was accomplished in December 2024, was oversubscribed 37 instances, with traders providing 40.6bn dirham ($4.47bn) in opposition to the 1.1bn dirham ($120m) that the corporate was in search of.

“That firm [CMGP] was supported by three personal fairness firms, amongst them DPI [Development Partners International]. It’s not an organization which by definition could be very well-known by the general public. Nonetheless, that modified after the IPO,” he explains, including that of the roughly 33,000 traders who participated within the IPO, 32,000 had been retail traders.

Increasing the product pool

Discussing what is going to drive the change’s future development, Senhaji highlights {that a} main focus is increasing the product pool to supply extra refined merchandise apart from shares and authorities bonds.

On this regard, the change in Might launched a futures instrument protecting the MASI 20, the index monitoring the market’s 20 most liquid shares. This transfer goals to reinforce liquidity, increase the investor base, and permit for lengthy and quick positions.

The change has indicated that future by-product choices will embody rate of interest futures, single-stock futures, and fairness choices. It hopes these merchandise will appeal to a deeper pool of institutional traders as

the nation prepares to finance large infrastructure spending.

Senhaji says the change is presently making ready to launch actual property funding trusts (REITs) and change traded funds (ETFs).

A cog in the true financial system

Senhaji readily admits that the position of the inventory market in any financial system is commonly not sufficiently identified or understood by most people. That is, nevertheless, shifting and extra Moroccans exterior the wealth and asset administration trade are taking an curiosity within the inventory market, he says.

“There may be rising curiosity within the change – from policymakers to college youngsters who’re dabbling within the change or fascinated by the whole lot to do with inventory markets. This wasn’t at all times the case and is an indication that the capital markets are starting to take their rightful place within the financial system,” he says.

“We’re seeing an uptick in new traders. Retail participation final yr was 22%, an enchancment from the ten% that we had at first of the last decade,” he says.

“The first market can also be in style. Corporations have now began to look very critically on the change as a supply of capital. That would translate into a brand new wave of IPOs,” he provides.

Though Morocco’s inventory market is using a wave of optimism, a number of dangers stay. Firstly, refined merchandise like futures, REITs and ETFs have a combined monitor document in Africa. They don’t at all times appeal to institutional traders and improve liquidity.

Derivatives typically face low adoption in rising markets attributable to restricted investor schooling and excessive transaction prices. For instance, Nigeria’s derivatives market was launched in 2018, however has seen minimal buying and selling volumes since. Kenya’s REIT market has struggled to draw recent listings. ILAM Fahari I-REIT, the one REIT that was actively traded on the Nairobi Securities Change (NSE), was delisted in February 2024.

Secondly, securing new IPOs could show difficult amid a strained international financial system. With bourses worldwide struggling to draw recent listings, Morocco’s monitor document – solely six IPOs since 2020 – suggests it will likely be an uphill battle to get extra firms to go public. The market additionally faces focus dangers. Morocco’s banking and actual property sectors account for over 60% of BVC’s capitalisation and drove a lot of the earnings development in 2024, whereas smaller sectors corresponding to agriculture and manufacturing lagged attributable to drought and weak international demand. This focus makes the market susceptible to sector-specific shocks corresponding to actual property slowdowns or banking stress.

Draw back dangers

Certainly, actual property markets in rising economies typically face boom-bust cycles. If demand for properties weakens post-World Cup, overvalued actual property companies might drag down the broader market. Over-optimism tied to occasions just like the 2030 World Cup could inflate valuations past fundamentals, risking a correction if expectations are unmet.

Lastly, whereas infrastructure spending tends to spice up development within the close to time period, it might carry longer-term dangers. It is because infrastructure spending tends to profit massive companies and concrete areas. Massive scale initiatives like sporting amenities may also result in fiscal pressure and the inefficient use of public property, as seen in South Africa, the place some stadiums stay considerably underutilised years after the 2010 World Cup.