The performance of some shares on the Tunindex and BVMT has been nothing short of spectacular. Shares in retailer Magasins General have almost tripled in value since the start of the year, with an increase of 180 per cent, and dairy firm Societe Tunisienne de l'Industrie Laitiere (STIL) has seen share price growth of 89 per cent in the same period. Both stocks have benefited from being formally tabled for privatisation, and while STIL, a traditionally volatile stock, is susceptible to continued price fluctuations, shares in the more stable Magasins General are likely to continue their upward trend.

Other stocks are recovering strongly following recent difficulties. Electrostar, the local subsidiary of Korea's LG International Corporation, and national carrier Tunisair have both seen year-to-date share price increases in excess of 80 per cent.

The most striking anomaly in this increasingly healthy market environment is the performance of Banque du Sud. Following the decision of the four interested candidates not to submit bids for the government's 33 per cent stake in the bank, its share price has fallen by 26 per cent since the beginning of 2004.

Also on a downward trend is brewery Societe Frigorifique et Brasserie de Tunis (SFBT), which has suffered a 6 per cent drop in its share price since the start of the year. Moreover, the volume of trades on this, one of the most liquid stocks in the market, has fallen considerably due to the company's 50 per cent foreign investment ceiling being reached.

While the trends are generally positive, continuing market vulnerabilities mean investors will think twice before rushing to market. 'One disappointment is that there haven't been any new listings this year,' says Hedi Ben Cherif of Tunisie Valeurs. 'We are waiting for Tunisie Telecom to be listed, but there is just not enough transparency in the process.'

The lack of new blood in the market is not the only issue troubling analysts, with low trading volumes continuing to prey on their minds. 'Liquidity is improving compared to last year,' says Cherif. 'But it is still insufficient.'

These clouds should not, however, be allowed to obscure the picture of a market that is on the up. According to Tunisie Valeurs, the bourse is set to see a 15 per cent increase in market capitalisation by the end of 2004, and 2005 is likely to boast growth of close to 20 per cent. Turnover is enjoying a similar revival. The 2003 fall in trading volume from TD 160 million a day to TD 125 million has been reversed, with the first seven months of 2004 once again enjoying an average turnover of TD 160 million.

Underpinning these upward trends over the next 12 months will most likely be growth in smaller players such as Electrostar, leasing stocks and the banking sector.