18 December 2004
Maroc Telecom (MT) started on a positive note on its debut on the Moroccan and international capital markets. The company's stock increased 17% on its first day of trading, Wednesday, Dec. 14, on the Casablanca Stock exchange (CSE). It closed at Dh79.9 for a total volume of 5.29 million shares while on the Paris Stock Exchange the stock closed at 7.32, an increase of 18.83% from the 6.16 of the initial public offering (IPO).
The Moroccan government successfully sold around 131 million shares of MT representing 14.9% of the company's equity on both the Moroccan and French capital markets. The offering was an undisputable success given that it was oversubscribed more than 21 times. A total of 30% of the offering will be listed on Euronext in Paris (39.25 million shares) and the rest on the CSE.
The IPO is expected to have a major positive impact on many segments of the Moroccan financial market. An estimated Dh50 million of fees will go to the thirteen brokerage companies for the primary market while their revenues derived from the secondary market will depend on the volume traded. The CSE will also benefit a lot from the listing. Total market capitalization has increased drastically from Dh127 billion to around Dh200 billion. The liquidity of the market also improved with a major increase in total trading volume. On Wednesday Dec. 15, total transaction volume reached a whopping Dh869 million in comparison with a daily average of Dh50 million. A total of 95% of this volume, though, was due to the rush for MT's stock.
Transaction costs on the CSE include -- in addition to brokerage commissions and VAT -- a 0.01% fee that goes to CSE itself. On the Dh53.7 billion volume traded on the Exchange in 2003, CSE cashed an estimated Dh2.67 million and is expected to benefit from MT's listing.
MT's IPO encouraged individual investors to enter the realm of the sophisticated stock market. "Individual investors directly holding shares on the CSE increased more than four times from an estimated 30,000 to around 140,000 thanks to MT's IPO," said Idrissi Kaytouni, member of the CSE's board of directors. Individual investors keeping a close watch on the stock's performance resulted in a stunning increase in the Exchange's website number of hits. "Our website's traffic surged from an average of 150,000 - 200,000 daily hits to around 500,000 - 750,000 because of the IPO," added Idrissi.
Dual-listing of the stock, however, causes some minor glitches due to market imperfections. While the stock was scheduled to make its debut on Monday concomitantly on both exchanges, the trading was put off by the local exchange's officials to Wednesday due to massive buy orders. The Moroccan market regulations -- as many financial districts around the world -- call for the suspension of a stock untill the next session if its price deviates more than 6% from the reference price. The objective is to lessen volatility and better safeguard investors' interests.
Trading, however, kicked off on the Paris market on Monday as originally planned since Euronext's statutes call for a 10-minute suspension for a deviation of more than 10% from the reference price. From the 6.16 IPO price, the stock soared more than 26%, opening at 7.8 and reaching a high of 7.85. It closed at 7.11 for a whopping total volume of 12.25 million shares. Activity on the stock, though, settled down during the two following sessions with 3.36 and 1.8 million shares changing hands, respectively.
Trading on Euronext runs daily from GMT 8 a.m. until GMT 4:30 p.m. while in Casablanca, markets open at GMT 10 a.m. and close at GMT 1 p.m. The exchange considered extending trading until GMT 4 p.m. to cater for the listing of MT. The Paris stock exchange has, therefore, 5.5 hours of more trading time.
A comparison between the 6.16 IPO price set by the French exchange commission and the DH68.25 on this side of the Mediterranean results in a Dh11.08/ parity while the closing price of Wednesday (7.32 - Dh79.9) shows a Dh10.92/ parity. This discrepancy creates the opportunity for arbitrage, assuming the actual exchange rate remains fixed.
The characteristics of the stock listed on the Paris bourse are exactly the same as that traded on the CSE, whereas usually such financial schemes of raising capital abroad call for the issue of Global Depository Receipts on the foreign exchange. Theoretically, traders of both markets can take advantage of price discrepancies between the two exchanges through arbitrage. In actual fact, though, the situation turns to the foreign traders' advantage.
"Foreign brokers can arbitrage between the two financial districts through buying on the cheap market and selling in the expensive market, if there exists a price discrepancy on the same underlying asset," said Nour-eddine Chammat, managing director of the Moroccan brokerage firm Finergy. "Local traders, though, will find it very difficult to conduct such transactions due to stringent currency-exchange regulations," he added. The Moroccan Dirham is not independently floating but is pegged to a basket of currencies.
Maroc Telecom (MT) started on a positive note on its debut on the Moroccan and international capital markets. The company's stock increased 17% on its first day of trading, Wednesday, Dec. 14, on the Casablanca Stock exchange (CSE). It closed at Dh79.9 for a total volume of 5.29 million shares while on the Paris Stock Exchange the stock closed at 7.32, an increase of 18.83% from the 6.16 of the initial public offering (IPO).
The Moroccan government successfully sold around 131 million shares of MT representing 14.9% of the company's equity on both the Moroccan and French capital markets. The offering was an undisputable success given that it was oversubscribed more than 21 times. A total of 30% of the offering will be listed on Euronext in Paris (39.25 million shares) and the rest on the CSE.
The IPO is expected to have a major positive impact on many segments of the Moroccan financial market. An estimated Dh50 million of fees will go to the thirteen brokerage companies for the primary market while their revenues derived from the secondary market will depend on the volume traded. The CSE will also benefit a lot from the listing. Total market capitalization has increased drastically from Dh127 billion to around Dh200 billion. The liquidity of the market also improved with a major increase in total trading volume. On Wednesday Dec. 15, total transaction volume reached a whopping Dh869 million in comparison with a daily average of Dh50 million. A total of 95% of this volume, though, was due to the rush for MT's stock.
Transaction costs on the CSE include -- in addition to brokerage commissions and VAT -- a 0.01% fee that goes to CSE itself. On the Dh53.7 billion volume traded on the Exchange in 2003, CSE cashed an estimated Dh2.67 million and is expected to benefit from MT's listing.
MT's IPO encouraged individual investors to enter the realm of the sophisticated stock market. "Individual investors directly holding shares on the CSE increased more than four times from an estimated 30,000 to around 140,000 thanks to MT's IPO," said Idrissi Kaytouni, member of the CSE's board of directors. Individual investors keeping a close watch on the stock's performance resulted in a stunning increase in the Exchange's website number of hits. "Our website's traffic surged from an average of 150,000 - 200,000 daily hits to around 500,000 - 750,000 because of the IPO," added Idrissi.
Dual-listing of the stock, however, causes some minor glitches due to market imperfections. While the stock was scheduled to make its debut on Monday concomitantly on both exchanges, the trading was put off by the local exchange's officials to Wednesday due to massive buy orders. The Moroccan market regulations -- as many financial districts around the world -- call for the suspension of a stock untill the next session if its price deviates more than 6% from the reference price. The objective is to lessen volatility and better safeguard investors' interests.
Trading, however, kicked off on the Paris market on Monday as originally planned since Euronext's statutes call for a 10-minute suspension for a deviation of more than 10% from the reference price. From the 6.16 IPO price, the stock soared more than 26%, opening at 7.8 and reaching a high of 7.85. It closed at 7.11 for a whopping total volume of 12.25 million shares. Activity on the stock, though, settled down during the two following sessions with 3.36 and 1.8 million shares changing hands, respectively.
Trading on Euronext runs daily from GMT 8 a.m. until GMT 4:30 p.m. while in Casablanca, markets open at GMT 10 a.m. and close at GMT 1 p.m. The exchange considered extending trading until GMT 4 p.m. to cater for the listing of MT. The Paris stock exchange has, therefore, 5.5 hours of more trading time.
A comparison between the 6.16 IPO price set by the French exchange commission and the DH68.25 on this side of the Mediterranean results in a Dh11.08/ parity while the closing price of Wednesday (7.32 - Dh79.9) shows a Dh10.92/ parity. This discrepancy creates the opportunity for arbitrage, assuming the actual exchange rate remains fixed.
The characteristics of the stock listed on the Paris bourse are exactly the same as that traded on the CSE, whereas usually such financial schemes of raising capital abroad call for the issue of Global Depository Receipts on the foreign exchange. Theoretically, traders of both markets can take advantage of price discrepancies between the two exchanges through arbitrage. In actual fact, though, the situation turns to the foreign traders' advantage.
"Foreign brokers can arbitrage between the two financial districts through buying on the cheap market and selling in the expensive market, if there exists a price discrepancy on the same underlying asset," said Nour-eddine Chammat, managing director of the Moroccan brokerage firm Finergy. "Local traders, though, will find it very difficult to conduct such transactions due to stringent currency-exchange regulations," he added. The Moroccan Dirham is not independently floating but is pegged to a basket of currencies.
Tarek Halim
© Morocco Times 2004
