TUNIS: After a strong year in 2010, the Tunis Stock Exchange (Bourse des Valeurs Mobilières de Tunis, BVMT) is working its way back to strength despite the rough start to 2011. Some sector indexes are on the up, while a new listing and development strategy look set to bring benefits to the bourse. The Tunindex gained 18.4 percent over the course of 2010, its eighth consecutive annual gain. All 11 of the sectoral sub-indexes tracked by the BVMT were up for the year. The financial services index was the strongest performer, rising by 37.7 percent for the year as a whole, followed by construction and construction materials (up 27.77 percent) and industrial shares (up 24.83 percent). Transaction volume grew by 49 percent on 2009 figures, while the capitalization of the bourse as a share of GDP grew to 24.1 percent, as compared to 20.8 percent at the end of 2009. Activity in 2010 was boosted by the reintroduction of tax incentives that allow companies that list more than 30 percent of their capital on the exchange before 2014 to benefit from a five-year reduction in corporate tax rates, from 30-35 percent (depending on the sector) to 20 percent. The year saw five new share listings, the largest of which were those of Carthage Cement and Ennakl, an automobile distributor. The listing of Carthage Cement raised TD134.9 million (€68 million) and Ennakl TD128.4 million (€64.7 million). Carthage Cement has also been among the most heavily traded shares in recent weeks and months. The other companies to have introduced stakes on to the market were from the financial services sector, comprising two insurance companies — Assurances Salim and reinsurer Tunis Re — and Modern Leasing. By contrast, the market has had a more difficult 2011 so far. Against a background of political unrest, it closed for a two-week period early in the year amid heavy losses. By mid-July the Tunindex stood at 14.9 percent below levels at the start of the year. Not all of this is attributable to the domestic unrest, however. Markets in nearby Morocco for example are down by some 10 percent, despite the country experiencing very little upheaval. The index has significantly underperformed the MSCI Emerging Markets benchmark index, which is down approximately 1 percent for the year. Transaction numbers in the first half of the year also saw a substantial decline to just over 570,000, down from 1.19 million in first-half 2010, a drop of 51.67 percent. Despite these reversals, over the long term the Tunisian bourse has remained a solid investment. The Tunindex index has posted gains of around 120 percent over the past five years even despite recent losses. This compares to an increase in value of around 55 percent for the MSCI Emerging Markets index, representing significant overall outperformance by Tunisia. The index had also posted something of a rally since the beginning of June, gaining 4.26 percent for the month as a whole and, by early August it was trading around the 4420 mark. Some sectors have also seen gains since the beginning of the year even though the Tunindex as a whole has fallen. Of the sectoral sub-indexes, the best performing for the year so far as of July 15 was the construction and building materials index, up 9.17 percent since January. Another two other sectors were also in the black, namely industrial shares, which were up 4.76 percent, and producers of basic materials, whose shares had risen 3.14 percent. Consumer goods producers, on the other hand, were down 3.14 percent. The worst performers by contrast were banks, some of which have exposure to loans from former regime figures that may not be repaid, helping explain a 19.3 percent decline for the year to date. Insurers also saw significant falls of 18.57 percent. Despite the slow start to 2011 and the continuing difficulties of some sectors, growth on the bourse is resuming. In May the BVMT saw its first new listing of the year, with the addition of technology firm Telnet Holding. Its introduction has underlined continued appetite for new listings on the part of investors. The bourse is also working to attract further introductions, and the success of Telnet offers a useful role model for other potential firms. In early July the president of the BVMT's management committee, Fadhel Abdelkefi, announced a new five-point development strategy for the market between 2011 and 2013, based around developing the country's financial market culture and awareness through media and education outreach campaigns and open days; deepening the market by making more companies eligible to list; further developing the bond market; improving the organization's IT platforms, including putting in place a new electronic trading and information platform in 2012; and developing the bourse's human resources through additional training programs. With these plans for the future and the successes of the past, it seems likely that the first half of 2011 will be a blip in the market's overall trajectory when seen from a longer-term vantage point.
