By Tom Pfeiffer
CASABLANCA, June 5 (Reuters) - Morocco's fast-growing stock market plans to invite the world's biggest investment banks to apply for membership this year, heralding a shake-up of a close-knit financial community dominated by local players.
Activity has surged on North Africa's biggest bourse in recent years, making fast profits for the country's banks and thousands of small investors and giving the market a growing role in the kingdom's economy.
The benchmark MASI index climbed 33 percent in 2007 and 71 percent in 2006, sparking growing interest among foreign investors. This year it has gained 14 percent, defying turbulence on world markets caused by the U.S. subprime crisis.
But it still suffers from a reputation as a financial backwater isolated by foreign exchange restrictions and a risky bet due to poor communication from quoted companies, most of which only have minority listings.
"We need to anchor the Casablanca stock market as a major actor for sub-Saharan Africa and the MENA region," bourse head Fath-Allah Berrada told Reuters.
"I think from the third quarter of 2008 we will organise a big roadshow to go and explain the results and organisation of our bourse to people in Paris, London or New York ... so that they become members."
For now, membership is limited to 16 local brokerages. Berrada said major investment banks like Goldman Sachs still thought Morocco's stock market too illiquid to be worth taking part.
"We want them to become members ... but to be a broker you need business so we need to make them want to come," he said.
The Casablanca bourse today has a market capitalisation of 700 billion Moroccan dirhams, or around 80 percent of the country's gross domestic product, Berrada said.
It represents about 5 percent of investment in Morocco's economy, double the year-earlier figure. "My goal is to rise beyond 10 percent at least," he said.
MAJORITY LISTINGS
Morocco's economy remains dominated by small-scale agriculture and its industrial base is much smaller than competitors Turkey and Egypt.
With around half the population illiterate and poverty widespread, most Moroccans think more about feeding their families than investing in the stock market.
But the biggest companies listed in Casablanca represent the strongest growing sectors -- telecoms, banking and real estate.
Tourism and remittances from Moroccans working abroad have channelled much-needed foreign currency back to the kingdom and much of it has found its way into local investment funds.
Berrada said the next stage for the Casablanca stock market would be when companies list a majority of their capital, increasing the power of shareholders and the likelihood of mergers and acquisitions.
"The stock market culture has begun to take root in Moroccan habits and our job is to spread it even further," he said.
To help integrate the bourse with foreign markets, Berrada said he planned to set up dual listings with other Middle East stock exchanges and make the benchmark Casablanca index comply with international standards.
The exchange launched a new version of Euronext's NSC trading platform in January, enabling investors to buy or sell shares when the price hits a pre-defined value and allowing for around 500 orders per second.
Berrada said the market was now capable of handling a growing number of new listings.
"All the work we've done since 2000 is bearing fruit.. We now have the means to receive a maximum number of companies," he said. "If we can get ten (IPOs) this year I would be happy." (Editing by Quentin Bryar)
