VZCZCXYZ0000
RR RUEHWEB

DE RUEHCL #0094 1351449
ZNR UUUUU ZZH
R 151449Z MAY 09
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC 8392
INFO RUCNMGH/MAGHREB COLLECTIVE
RUEHMD/AMEMBASSY MADRID 3865
RUEHFR/AMEMBASSY PARIS 0703

UNCLAS CASABLANCA 000094 
 
SIPDIS 
 
STATE FOR NEA/MAG 
COMMERCE FOR NATHANIEL MASON 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINT PGOV MO
SUBJECT: A NEW START FOR THE CASABLANCA STOCK EXCHANGE 
 
REF: 08 CASABLANCA 224 
 
¶1.  (SBU) Summary: The U.S. Consul General in Casablanca met 
with the newly appointed U.S. trained managing director of 
the Casablanca Stock Exchange (CSE), Karim Hajii, on May 13th 
to discuss the loss of consumer confidence at CSE in the 
midst of widespread speculation of insider trading and market 
manipulation.  Hajji spoke of CSE,s new Code of Conduct and 
changes within the Moroccan Council for the Code of Ethics in 
Securities Markets, the financial sector watchdog.  Referring 
to efforts to attract more liquidity to CSE, Hajii said, the 
Ministry of Finance will need to offer tax incentives for 
long term investors and allow other financial instruments 
into the market such as short selling and futures.  Finally, 
he discussed his optimistic vision for financial integration 
in the Maghreb region.  End Summary. 
 
¶2.  (SBU) Mindful of the limited number of investors in the 
country's stock exchange, Hajii outlined his strategy to 
increase the estimated 100,000 investors, and in turn bolster 
CSE,s liquidity.  Engaging Morocco's middle class will be 
key, he said.  In order to attract investors, Hajii 
explained, the Ministry of Finance will need to offer tax 
incentives for long term investors and make available other 
financial instruments such as short selling and futures to 
the public. 
 
¶3.  (SBU) Turning to Initial Public Offerings (IPOs), he 
argued that the gloomy financial outlook has led some firms 
to cancel or postpone their IPOs.  Citing the case of Royal 
Air Maroc (RAM), he posited that it would be months before 
the airline company would pursue this option.  He did confide 
that Marsa Maroc, Morocco's largest port operator, is set to 
go public in the upcoming months. 
 
¶4.  (SBU) Faced with widespread speculation of insider 
trading and market manipulation (reftel), Hajii assured the 
CG that concrete steps have been taken to regain consumer 
confidence.  Specifically, he cited the Exchange,s newly 
minted Code of Conduct that prohibits CSE employees from 
trading shares in which they have a vested interest.  He also 
discussed improvements in the Moroccan Council for the Code 
of Ethics in Securities Markets (CDVM), which will soon 
become independent of the Ministry of Finance.  He did, 
however, critique Morocco's legal system, under which CDVM is 
unable to prosecute individuals for insider trading and/or 
market manipulation. 
 
¶5.  (SBU) Active in regional groupings aimed at creating 
financial synergies like the Maghreb Businessmen Forum and 
the Unified Arab Stock Exchange, Hajii noted that 
unfortunately such initiatives have hitherto failed to 
generate anything concrete.  Having recently participated in 
a meeting among North African businessmen in Algiers, he 
noted his positive impression of the Algerian business 
executives he had met. However, he criticized the Algerian 
government, explaining that government regulations that 
prohibit 51 percent foreign ownership in a business do not 
make business sense.  Nonetheless, he firmly believes that 
CSE has the potential to become the regional hub for 
investment in the continent, noting that the volume of shares 
traded in Morocco is the largest in North Africa. 
 
¶6. (SBU) Comment: The decline in consumer confidence has 
created a precarious investment environment at CSE.  However, 
there are some glimmers of hope as the market is slowly 
picking up, in part due to the success of agribusiness 
shares, but also in part due to Hajii's leadership and the 
renewed confidence in the market that it brings.  End Comment. 
MILLARD