Tunisia’s Islamist party Ennahda is preparing to create a coalition government as early indications show it has won about 40 per cent of the votes. Worries over the election process led to a 1.55 per cent fall in the Bourse de Tunis the day after the elections, but regained by 1.25 per cent as the process went without trouble.

Investors are eager to see this new political process in action and the outcome will have significant implications on Tunisia’s bourse.

“The first challenge is to form a government then elect a president. It would be encouraging if they do it quickly and then they can get on with the next task at hand and rewrite the constitution. The Tunisians may have been united in getting rid of an old leader, but that does not mean they’ll be united in a new parliament,” says Liz Martins, senior economist at HSBC.

The new government will have to focus on creating a stable business environment for investment and creating new jobs, which will be a challenge. About 80 per cent of the country’s exports go to Europe and with the debt crisis there will be a weakening demand from Europe.

Even so, the exchange has fared better than other countries afflicted by the Arab uprisings. Since the beginning of the year, the main index, Tunindex, has dropped about 10 per cent. Compared with Egypt, which has fallen about 40 per cent and Jordan showing a 17 per cent decline, the impact of the revolution has not been too devastating.

Since June, the bourse has been on an upward trajectory, rising from lows of 4,091 in May to 4,650 in September and October, but the Bourse de Tunis is still very small. Market capitalisation is about $10bn with just 58 companies listed.

Daily turnover has dropped from about $6m late in 2010 to about $4m today.  

Mohamed Fadhel Abdelkefi, president of the bourse, has laid out a three-year development plan for the financial market to enrich the exchange and increase its market capitalisation by encouraging more companies to list on the exchange.

There is hope that once a new government is in place, work can begin on listing the confiscated assets belonging to ousted President Zine el-Abidine Ben Ali and his family.

As stability returns, postponed initial public offerings (IPOs), particularly that of Tunisie Telecom, will likely come to market.

There are also plans to develop a secondary mortgage market.

“It will be a very challenging year ahead. What we look for as signs of recovery – and what we expect the stock market will be watching for too – would be a return to positive growth in the third quarter and the materialisation of some of the promised aid flows,” says Martins.