Morocco: The Casablanca Stock Exchange Caught in the Cyclone of the International Financial Crisis
3 February 2009
Read by 2162 persons
"It's panic!" These were the first words of a Casablanca trader we called to get his opinion on the impact of the international financial crisis. Yesterday, the MASI (Moroccan All Shares Index) fell by 3.49%, barely outperforming the CAC40 (-4.87%). While Morocco was thought to be protected by its fundamentals, since Tuesday the fall has followed that of various international stock markets.
Lehman Brothers. The bankruptcy of this investment bank plunged the entire global financial system into the red. While we thought the worst of the subprime crisis was behind us, systemic risk has now appeared. Lehman Brothers will not be saved by the US Treasury, unlike the mortgage refinancing agencies Fannie Mae and Freddie Mac. Lehman Brothers is not the only bank in trouble. Faced with the risk of contagion, Merrill Lynch was forced to sell itself to Bank of America.
Morocco, which at first seemed protected, is feeling the blow. At least as far as the Casablanca Stock Exchange is concerned. Indeed, the fundamentals of the economy remain positive despite the first signs of slowdown in tourism and real estate. Furthermore, it is unlikely that Moroccan banks are exposed to risk from loans granted to Lehman Brothers like their Japanese or European counterparts.
However, prices are falling... dangerously. And not just any prices! At the end of the session on Monday, the first values to suffer were mainly those in the real estate sector. Thus, Addoha, Alliances, Delta Holding, and CGI were shaken, with drops of up to -6%. Today is no better, since by midday, the real estate sector continues on a downward trend of around 6%. The financial sector was also affected yesterday, but less severely. The shockwave will be stronger today, with shares of major banks falling by 6%. Credit companies and insurance companies are also being dragged into this spiral. We can still put the plunge into perspective by looking at current stock prices in France: -17% for Natixis, -11% for Dexia, -9% for Crédit Agricole, and -9% for AXA.
If Monday's end of day was very tense for Casablanca traders, today's seems even more catastrophic for the finance and real estate sectors. Small Moroccan shareholders had become accustomed, over the past two years, to steadily rising prices. Today's awakening must have been harsh. The Casablanca Stock Exchange is verifying the famous phrase of the British economist John Maynard Keynes: "Trees do not grow to the sky."
Mohamed Ezzouak
Posted online on Thursday, October 9, 2008
yabiladi.com
Lehman Brothers. The bankruptcy of this investment bank plunged the entire global financial system into the red. While we thought the worst of the subprime crisis was behind us, systemic risk has now appeared. Lehman Brothers will not be saved by the US Treasury, unlike the mortgage refinancing agencies Fannie Mae and Freddie Mac. Lehman Brothers is not the only bank in trouble. Faced with the risk of contagion, Merrill Lynch was forced to sell itself to Bank of America.
Morocco, which at first seemed protected, is feeling the blow. At least as far as the Casablanca Stock Exchange is concerned. Indeed, the fundamentals of the economy remain positive despite the first signs of slowdown in tourism and real estate. Furthermore, it is unlikely that Moroccan banks are exposed to risk from loans granted to Lehman Brothers like their Japanese or European counterparts.
However, prices are falling... dangerously. And not just any prices! At the end of the session on Monday, the first values to suffer were mainly those in the real estate sector. Thus, Addoha, Alliances, Delta Holding, and CGI were shaken, with drops of up to -6%. Today is no better, since by midday, the real estate sector continues on a downward trend of around 6%. The financial sector was also affected yesterday, but less severely. The shockwave will be stronger today, with shares of major banks falling by 6%. Credit companies and insurance companies are also being dragged into this spiral. We can still put the plunge into perspective by looking at current stock prices in France: -17% for Natixis, -11% for Dexia, -9% for Crédit Agricole, and -9% for AXA.
If Monday's end of day was very tense for Casablanca traders, today's seems even more catastrophic for the finance and real estate sectors. Small Moroccan shareholders had become accustomed, over the past two years, to steadily rising prices. Today's awakening must have been harsh. The Casablanca Stock Exchange is verifying the famous phrase of the British economist John Maynard Keynes: "Trees do not grow to the sky."
Mohamed Ezzouak
Posted online on Thursday, October 9, 2008
yabiladi.com
