Energy on the Stock Market
Soon after the announcement of the oil and gas finds, the Casablanca Stock Market livened up. However, the tide rapidly waned, giving way to a falling trend and to a stagnant marketplace.
Over the week following the announcement by His Majesty, on 20 August, of the discovery of important oil and gas reserves in the region of Talsinnt, the CSE went up to gain about 60 points, thus reaching an YTD performance of 2.53 percent.
But the upward trend was short-lived. The General Index immediately returned to its traditional falling trend. On 4 September, it was set at 734.31 points, i.e. an YTD performance of 5.50 percent.
In fact, this is not the first time when such a phenomenon occurs. Faced with a series of accumulated losses, which began several months ago, investors -institutional and individuals alike- became over-cautious. And any profit, as little as it might be, is worth taking to make up for the continued losses.
In fact, the Stock Exchange is unlikely to suddenly recover through such surprising events. It requires more visibility, which can only be achieved through the implementation of the reform agenda recommended for the financial market.
Such measures include encouraging SMEs to join the Stock Market, further transparency on transactions, better communication from listed companies, a more regular and firm role of the control body CDVM.
Nevertheless, the oil and gas finds are very likely to have a positive impact on the financial market as well as on the national economy in general. For if we go back to history, we will see that the three major stages of development of the international stock markets (1880,1920 and the one which started a few years ago) correspond respectively to three main waves of technical progress: The first centred on oil, the second on electricity, and the last on information technology.
In the absence of a third market inside the CSE devoted to start-ups (the creation of which is, however, on the agenda), the national financial market has remained a mere spectator amid the various developments taking place, in this area, on the international stock markets.
Perhaps, the emergence of this new market is to be bound with the recently discovered natural resources. Such was the case in other countries -more than hundred years ago.
Anyway, investors henceforth manifest a particular interest in the stocks of companies such as Samir and Afriquia Gaz. But there is also a similar interest in cement manufacturing companies, particularly CIOR, the activity of which is expected to go up thanks to increased investments and to a reduced energy bill.
It is true that energy investments may be very profitable, but they are also risky, due to the fluctuations of the sector. The cyclic economic demand, the high costs of exploitation, and the development of the political circumstances consequently contribute to the instability of investments in oil and gas stocks, as stock prices largely depend on the fluctuations of oil prices on the international markets. – (Finances News)