After a difficult 2002 and 2003, the undervalued market has rebounded. Year-to-date, the market has grown by 7 per cent and the figure for full-year 2005 is expected to be 10-12 per cent. Further double-digit growth is expected in 2006. With a price/earnings (PE) ratio of 14.5-15, the exchange is beginning to approach its natural PE equilibrium – 18-19 – of the 1990s. ‘The market is reaching maturity,’ says Mohammed Sebti of the local Upline Securities. ‘In two years it will be back at the levels we saw before 11 September [2001].’

The market’s strong performance is due in no small part to a series of IPOs. Lydec was the third company to float this year, and the fifth in 12 months. In early 2005, a 14 per cent stake in pharmaceuticals company Sothema, capitalised at MD 633 million ($44 million), was floated, and in July shares in agribusiness Dari Couspate were listed on the market.

More are on the way. The IPO of mid-cap Risma, a subsidiary of France’s Accor, is due in the autumn, and the turn of the year is expected to see the sale of shares in flag carrier Royal Air Maroc. IPOs of two big caps, Meditel and Regie des Tabacs, are set for 2006, and a number of others – including utility companies Redal and Amendis, insurance giant RMA Watanya and maritime company Comanav – are likely to reach the market in 2006/07.

Particularly good performers in recent months have been mining group Ominium Nord-Africain, Attijari Wafabank and Societe Nationale de l’Investissement. ‘They have good business plans, they have performed well in terms of net income, and they are quite liquid,’ says Sebti.

Less impressive has been the performance of mining companies Managem and Societe Metallurgique d’Imiter. ‘Managem had very bad financial results in 2004, due partly to its overestimation of the stock of gold they expected,’ says Sebti.

Elsewhere, cement manufacturers Holcim, Lafarge and Ciment de Maroc are all good picks for the coming months. ‘The cement sector is very promising,’ says Sebti. ‘Infrastructure developments and improvements in living standards mean that demand is growing quickly.

‘Banking is also looking very promising. Banks are earning a larger part of their income from improved services, rather than depending on interest, so earnings are more stable. BCP [Banque Centrale Populaire] has a very good business plan – it is acting as the back office for regional banks and it is beginning to operate as a commercial bank. Last year it was the best performer in terms of net income, earning more than MD 1,000 million [$110 million].’