Shares on the kingdom’s main index, the Moroccan All Shares Index (MASI), are up 14 per cent since the beginning of the year, reaching 4,503 points on 10 August – a five-year high. Since the end of 2002, stocks have increased by 44 per cent. Investor confidence is high.

A combination of sound government economic policies, Morocco’s recent free trade agreement with the US, healthy dividends and the successful initial public offering (IPO) in June of Banque Central Populaire– more than 10 times oversubscribed – have created an optimistic air.

Cement firms such as Lafargeand Holcimhave done particularly well as they benefit from a construction boom. The banking sector too, buoyed by the merger earlier in the year of two of the kingdom’s biggest banks – Wafabankand Banque Commerciale du Maroc (BCM)to create Attijari Wafa– has seen some impressive gains. The prospect of further consolidation as the sector prepares for deregulation has added to the optimism. Food and beverage firms have also benefited from benign market conditions.

On the face of it the prognosis is rosy, but healthy figures disguise market truths that are hard to ignore. The index has stagnated since March, and earlier expectations that stock levels could rise by 25-30 per cent this year appear unfounded. In fact the indexes are only now just reaching 1999 levels. ‘Between 1999 and 2002 stocks decreased by 52 per cent,’ says Amin Eljirari, market analyst at Attijari Finance. ‘Stocks have been good value over the last two years, which explains some of the rises.’

With shares showing little movement over the recent months, many are wondering if the market has hit its peak. ‘There is nothing new in the market and there has been no rationale behind the last two years’ growth,’ says one analyst. ‘There is too little innovation, not enough activity, and too few smaller companies listed on the bourse to drive market growth. Unless we see some more IPOs, the market isn’t going anywhere.’

Several IPOs, such as those of Maroc Telecomand state-owned maritime firm Comanav, are on the horizon, but are unlikely to provide a short-term fillip. ‘The problem with the bourse is that it is not representative of the market,’ says the analyst. ‘There are too many large firms operating an oligarchy, big conglomerates owned by just a few holding companies, distorting the market. Smaller firms have to be persuaded to list themselves on the bourse, but at the moment the private sector plays too small a part in financing these operations.’

Whatever the view, some stocks have bucked the trend and lost value. Shares in state refiner Societe Anonyme Marocaine de l’Industrie & du Raffinage (Samir),for example, have remained in the doldrums since the fire at the kingdom’s only refinery at Mohammedia in late 2002, although if the planned $600 million plant upgrade gets government approval in September, its shares are likely to rocket.