The recovery of the Bourse de Tunisie does not just depend on the country’s 23 October elections, but also the situation in Libya, which in July continues to drag on the performance on Tunisian stocks.

Since January 14 when the protests began in the country, the bourse has fallen 16 per cent and market capitalisation has decreased to about $11bn. The lowest point was in January when the exchange declined by 20 per cent. While it has improved by 4 per cent overall, the continuing civil war in Libya has hindered the recovery.

The markets have slowed down, foreign investors have left the country and tourism has declined by about 50 per cent. The exchange is in need of stimulation. Trading was suspending for a total of 15 trading days from 28 February, following the resignation of Mohamed Ghannouchi, the prime minister at the time with close links to the old regime.  

Daily revenue on the stock market in 2010 was $5.8-6.5m, it has fallen to about $1m. Trading volumes are weak compared with the previous year. Investors are still wary and many are pinning their hopes on the elections to establish stability and more visibility in the markets. The business environment has improved, but investment is still suffering.

Despite the lacklustre performance, the bourse is not performing as badly as those in other North African countries. The Egyptian Exchange was down by 30 per cent as a result of the revolution that ousted Hosni Mubarak. Morocco’s Casablanca Stock Exchange declined by 9.5 per cent, even though protests have been relatively subdued in the country.

“The Bourse de Tunisie is not doing too badly, there is a general optimism among investors, primarily local investors. The foreign investors are still following this market very closely and they will come back. There are opportunities now and deals to be found now that there is no threat of a president controlling the economic landscape,” says Mourad Baly, relationship manager at Axis Capital, a brokerage firm based in Tunisia.

There was even an initial public offering (IPO) in May amid the instability. ICT operator Telnet Holding offered 20 per cent of its shares priced at TD5.8 ($4.14) . It was oversubscribed 3.3 times and raised $8.8m. Its shares jumped by 24.14 per cent in its first week of trading.

The 123 companies previously owned by members of former President Ben Ali’s family will either be offered in an initial public offering (IPO) or sold off to private investors. Shares in listed companies owned by Ben Ali will be floated, but this is unlikely to happen before the elections in October.

“The new government will have to decide how fast they can implement all of this, they will need to act pretty quickly, because they need to raise cash,” says Baly.