Oil effect: analysis of the Casablanca Stock Exchange behavior.
Casablanca's stock exchange was quick to react to the first oil and gas findings in the Moroccan area of Talsinnt. Before it can be considered as a national discovery, reliable estimates of the new field's true value are yet to be confirmed.
Ever since the announcement of the discovery, sharp rises and declines have characterized the stock market. However, many analysts believe that the current movements are only temporary, as are always following new announcements.
The market can react in either direction: A stagnation or slight correction may occur, in which case it is usually the result of profit realizations. On the other hand, a revival of the market is a sign of investor-confidence in the country's economic fundamentals, which may shoot the market upwards. If indeed a decline should take place, it may suggest that investors are hesitant to invest in Casablanca's stock exchange, at least for the time being.
Although market specialists do not assume an automatic market rise, most agree that values like Refineries (Samir), iron and steel industries, as well as other energy-using industries like cement factories are of high value, and are most likely to positively influence the market.
On the other hand, the agitation of the market could lead to much speculation. One of the functions of the stock exchange is to finance companies by issuing shares and debts — another is to unite investors and speculators in a single place. By controlling these two functions, the stock exchange could manipulate stock values — making them sharply rise — only then to create a fall shortly thereafter.
Nonetheless, one thing is sure. The Moroccan economy will significantly benefit from the discovery of abundant and high-quality gas and oil in the area of Talsinnt. The advantages and profits will also be felt by banks, for instance, which are the ones to provide necessary funds for investment and consumption.
The Casablanca Stock Exchange is not only a place where supply meets demand, yet it is also a place where anticipations and expectations take place. However, it is most likely still too early for investors, speculators or market specialists to draw any final conclusions. — (Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)