African exchanges need a platform for cooperation and the development of their capital markets — Karim Hajji, CEO, Casablanca Stock Exchange

Karim Hajji, Chief Executive of the Casablanca Stock Exchange (CSE) gives an exclusive interview to Capital Markets in Africa and elaborates on aspects of Moroccan capital markets development and investment opportunities.  He also spoke about the need to make African exchanges more liquid and advocated for African exchanges to strengthen their ties in order to create a platform for successful cooperation and to identify avenues for the development of their capital markets.

The Casablanca Stock Exchange is one of the oldest stock exchanges in Africa. What has it accomplished?

Karim Hajji: The Casablanca Stock Exchange was founded in 1929.  Since then, it has become one of the largest and most advanced stock exchanges in Africa and the Maghreb.

On the technological level, Casablanca Stock Exchange introduced an electronic quotation system in 1997 with a more advanced version of this platform being rolled out a decade later. The Casablanca Stock Exchange is currently working with London Stock Exchange Group (LSEG) to implement a higher performance version of the trading and market surveillance platform. This new platform meets international standards and will allow the listing of new financial products. It will be operational in the first half of 2016.

In terms of visibility, the Casablanca Stock Exchange broadened its channels of communication. It is present on trading screens in 35 countries and in over 400 financial institutions worldwide. It also has a social media presence (close to 57,000 fans/ followers on Facebook) and a mobile app with almost 11,000 users. It also has a regional presence with some forty display screens in the Regional Centers of Investment (CRI) and the Federation of Moroccan Enterprises (CGEM) offices across Morocco, with the goal of building a closer bond with regional companies and investors.

Internationally, the Casablanca Stock Exchange is finally firmly established within the financial community and recognised as an international standard stock exchange. The Casablanca Stock Exchange is, in fact, the first stock exchange in Africa and one of the first worldwide to be certified ISO 27 001 for the security of its IT systems. It also has ISO 9001 V 2008 certification for the quality of its services.

Regarding the financing of the economy and companies, the stock market capitalisation represented 54% of GDP as of June 2015, while listed companies generated revenues of 248 billion MAD,  being 27% of GDP, in 2014. Over 80% of the listed companies are amongst the 500 most successful Moroccan companies. And since 2001, over 100 billion MAD has been raised through IPOs, capital increases and bond issuances.

Regionwise, the Casablanca Stock Exchange is ranked third behind the Johannesburg and Egyptian stock exchanges with a capitalisation of USD 50 billion, as of June 2015.

In June 2015, the Casablanca Stock Exchange signed an agreement with the London Stock Exchange Group (LSEG) to support the launch of LSEG’s ELITE programme in Morocco. What does the agreement mean for SMEs in Morocco? What is being done to support SMEs in Morocco?

Karim Hajji: Our agreement to launch ELITE is part of a strategic partnership with LSEG, designed to make Morocco a regional financial hub and incorporating SMEs financing as a key component.

SMEs have difficulty accessing financing to grow, even though they represent over 95% of the economic base, accounting for over half of employment and are an engine of growth for the Moroccan economy.

ELITE is an innovative programme for companies, particularly SMEs with a high potential for growth and having a sustainable development vision. In this respect, ELITE offers them support, training and relationship building: they will join a community platform of over 270 companies, 180 advisers and 80 investors across 17 countries worldwide.

As part of this project, the Casablanca Stock Exchange identified close to 500 Moroccan companies potentially eligible for ELITE. Some of these companies have already been directly approached. In parallel, our teams, in cooperation with LSEG’s teams, are working to tailor the project to the specific characteristics of Moroccan companies and their needs. The Casablanca Stock Exchange also selected an academic partner, responsible for providing training under the programme.

In addition to ELITE, we are currently working on the development of a specific PME offering through the launch of a dedicated alternative market based on the AIM (Alternative Investment Market) model. This model enabled the LSEG to list over 3,000 companies that raised more than 90 billion pounds sterling in the space of twenty years.

Furthermore, we recently signed an agreement with the APSB (Moroccan Professional Association of Securities Dealers) and Maroc PME (SME’s Moroccan State agency) to carry out a study regarding the bottlenecks faced by the SMEs to access the financial markets. This study will culminate in an action plan designed to resolve this issue.

What is being done to make the Casablanca Stock Exchange a destination for viable investments and to attract investors and issuers?

Karim Hajji: In order to attract more investors and issuers, we are working on a number of issues including accessibility, product offering and infrastructure. regarding accessibility, we have put in place a range of tools to facilitate corporate and investor market access by ensuring information is disseminated as broadly as possible via display screens in the Regional Centers of Investment CRI  offices, raising our profile on the screens of international financial information providers but also by providing support and advice to companies ahead of their Initial Public Offer through canvassing and dedicated programmes such as ELITE.

We are also working to increase market transparency by improving regulation, promoting research – we publish analyst research on our website – and encouraging issuers to ensure their financial communication is in line with best practices, in particular by instigating the creation of the AMRI (Moroccan Investor Relations Association).

We are also looking to broaden our offering of products and financial instruments (derivatives, ETFs, etc.) and to implement a developed market infrastructure (new quotation platform). We hope that the Stock Market Bill, which is currently going through Parliament, will be approved so that we can launch these products.

Most African stock exchanges have poor liquidity. What are you doing to improve this?

Karim Hajji: Improved liquidity is a key part of our strategy and is closely linked to the injection of fresh paper into the market and the increase in the number of listed companies. The more shares in circulation, the more trades and liquidity there will be. As indicated above, we are hoping to encourage companies to turn to the stock exchange for financing, either when listing on the Casablanca Stock Exchange or carrying out market transactions: capital increases, bond issuances.

Most African stock exchanges are small and dominated by a few large companies. As a result, certain experts have recommended that a number of stock exchanges merge to form a regional stock exchange. What is your view on this?

Karim Hajji: Before talking about merging, it would be a good idea for the region’s stock exchanges, namely those in North, West and Central Africa, to strengthen their ties in order to create a platform for successful cooperation and to identify avenues for the development of their capital markets. These stock exchanges would thus become more attractive for investors and issuers, initially local and subsequently regional and international.

An initial step was taken in this regard: Casablanca Stock Exchange was involved in the creation of a capital markets working group, which it jointly chairs with the Bourse Régionale des Valeurs Mobilières (BRVM). This group is comprised of representatives of regulators (CDVM and CREPMF), central depositories (Maroclear and CD/BR) and professional associations of securities dealers (APSB and APSGI) from the two markets. It is tasked with developing the capital markets in Morocco and WAEMU both domestically and at a regional level, adopting best practices and bringing the two markets closer in order to improve international visibility and accessibility.

What would you like to achieve for the Stock Exchange over the next five years?

Karim Hajji: The next five years will be focused on rolling out our Horizon 2020 strategy. Our goals are as follows: increase market liquidity; play a major role in the domestic economy; be reclassified as an Emerging Market; meet international standards and consolidate our regional leadership.

To achieve this, we are applying a two-phase strategy. Firstly, we are working to consolidate our technological services and product offering. That is why we are implementing a new quotation platform and are looking to launch new products. We are also seeking to diversify our service offering and improve the market’s financial culture by supporting companies and educating investors, amongst other things.

The second phase of our strategy consists of turning the Casablanca Stock Exchange into a regional financial hub. Thanks to its diversified financial product offering and a technological offering secured to best international standards, the Casablanca Stock Exchange does indeed represent an attractive and competitive financing and investment alternative both regionally and internationally.

Thank you very much for granting this interview