Tunisia Stock Exchange positive on economic prospects

Share prices on the Tunisian Stock Exchange (Bourse de Tunis – www.bvmt.com.tn) have been moving ahead all November, starting with a positive reaction to the meeting between Rachid Ghannouchi, leader of the Islamist Ennahda party and stock market executives only days after the election and moving forward as the politics progressed well. Even before the election results were finalized from the 23 October election that swept Ennahda to power, Ghannouchi was meeting the bourse on 26 Oct to send the message that the government would be “business friendly”. It is the first Islamist party to win power since Hamas’ 2006 victory in Palestine.
According to Bloomberg, the TUNINDEX dived from a close of 4636.67 on 20 Oct to 4538.41 on 24 Oct, but bounced back very fast and reached 4718.16 by 8 Nov. The index has been moving sideways since 4730.69 close on 18 Nov, back to levels last seen in early February. The low was 4033.43 on 25 Feb. The recent high was 5695.82 on 30 Sept 2010.
According to a report on Reuters, a party official said Ghannouchi met the market executives “to send the message that the stock exchange is very important and that he is in favour of more listings to accelerate economic growth and to diversify the economy.” Reuters adds that the Tunis stock market index fell sharply when trading resumed after the Sunday election, but rallied on news of the meeting and prices were up 1.13% by mid-morning.
Reuters reports that Ghannouchi spent 22 years in exile in Britain and has stressed his party will not enforce any code of morality on Tunisian society, or the millions of Western tourists who holiday on its Mediterranean beaches: “He models his approach on the moderate Islamism of Turkish Prime Minister Tayyip Erdogan”, according to writers Tarek Amara and Christian Lowe.
Tunisia’s Constituent Assembly held its historic first session on 22 Nov and Ghannouchi signed a coalition agreement with the heads of two junior coalition partners, Moncef Marzouki of Congress for the Republic and Mustafa Ben Jaafar of Ettakol. In the election, which saw a turnout of over 90% of registered voters, Ennahda took 89 seats of the 217-member assembly, Congress won 29 and Ettakol 21. Under the new agreement, Ennahda secretary-general Hamadi Jbeli will hold the most powerful post of prime minister, while Marzouki will be in the largely ceremonial role of Tunisian president. Ben Jaafar will be speaker of the assembly, which has the task of drafting a new constitution. They pledged to hold elections within a year.
There is a challenge to get the economy moving. Reuters cites Central Bank of Tunisia (www.bct.gov.tn) governor Mustafa Kamel Nabli saying on 24 Nov that the economy grew 1.5% in the third quarter but growth in 2011 will be close to zero. Unemployment stood at 18.3%. However, the draft budget presented earlier in November foresees 4.5% growth in 2012, after 3.7% growth in 2010. Nabli told Reuters “”We expect GDP growth of 4 percent next year but the European crisis will dampen these figures.” The World Bank, European Union, the African Development Bank and the French development agency has been giving an emergency $1.4 billion funding package. Nabli said another $5 bn will be needed next year to support the budget.

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