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N° 429, December 10th to December 14th, 2001

Spanish FDI dries up on govt orders – media
Spanish FDI in Morocco dropped 97.3% in the first half of 2001 – from €30.9 million to €842,000 – and the Spanish newspaper that reported the statistics says that investment flows were deliberately slowed by the Spanish government. The economic daily Cinco Dias said that after the failure of talks to renew the Morocco/EU fisheries agreement, and the subsequent grounding of the Spanish fleet, Prime Minister José Maria Aznar informally advised government Ministries to slow down existing investment projects as much as possible.

First Moroccan satellite launched by Russia
The first-ever Moroccan satellite was placed into orbit on December 10th by a Zenith-2 Russian satellite launcher that took off from the Baikonour Cosmodrome in Kazakhstan. The satellite has been placed in a low circular orbit at an altitude of 1000 km, and will carry out ground observations, data collection, and geographic localization.

Finance.Com buys Maroc Soir media group
Benjelloun Group holding company has bought the Maroc Soir Group, which owns such titles as the quasiofficial Le Matin du Sahara et du Maghreb., which includes such high profile firms as BMCE Bank, plans to build up a range of media products including daily and weekly newspapers and cutting-edge electronic publications. The strategy will be based on partnerships with existing French, Arabic, and English-language media groups. already owns 20% of private GSM operator Méditel and 23% of the Tangiers-based radio station Médi 1.

Newspaper confiscated, former spy jailed
Controversial satirical weekly Demain Magazine has been suspended, and its most recent issue partially confiscated by police, even after Editor Ali Lmrabet paid a court-imposed fine. Mr. Lmrabet had been sentenced to four months in prison and a fine of Dh30,000 on charges of “disseminating false information likely to result in public disorder.” The charges arose from an article concerning the possible sale of the royal palace at Skhirat (near Rabat). The verdict has been appealed by the Public Prosecutor, and the fine – which is still payable despite the appeal – was paid at the last minute but too late to avoid suspension. Meanwhile, former Moroccan secret agent Ahmed Boukhari has been sentenced to three months in prison and Dh320,000 in fines and damages for the defamation of three former colleagues. The sentence is likely to further delay Mr. Boukhari’s testimony before a French judge investigating the death of Mehdi Ben Barka in 1965.

Foster Wheeler wins $500m SAMIR contract
American oil engineering company Foster Wheeler has been awarded a $500 million refinery expansion contract by Moroccan refiner SAMIR. The contract, to be completed by 2004, will expand SAMIR’s Mohammedia factory from a capacity of 125,000 barrels per day to 160,000 barrels per day.

Govt to spend Dh400m on tourism promotion
The government is to spend Dh400 million on tourism promotion next year, including Dh200 million for the National Tourist Promotion Agency (ONMT)(an increase of 95%) and Dh47.8 million for tourism project assistance. The total ONMT budget will amount to Dh250 million after the addition of special taxes collected on hotel revenue, of which Dh140 million will be spent on marketing in France, Germany, Britain, and other countries.

Recommendation: Brasseries du Maroc
Upline reaffirms its buy recommendation on Brasseries du Maroc (SBM) notwithstanding the failure of the intended bottling partnership between SBM and Coca Cola. The stock has already lost 50% this year because of concern over prospects for the Coca Cola deal, and the current shareprice of Dh845 is still far below our valuation of Dh1550. Despite the failure of the bottling partnership, SBM will remain a Coca Cola licensee until at least 2006.

Market up 0.2% on the week
Over the week ended December 14th 2001, the General Index and Upline Securities Index moved by +0.19% and –0.38% respectively. Official market transactions amounted to Dh155.9 million, and the bloc market registered Dh52.3 million. The largest gains were recorded by Oulmès (+12.4%), Marlease (+12.3%), Magbail (+8.8%), and CTM (+8.2%), whereas the main losses were Fertima (–16.2%), Diac-Salaf (– 7.8%), Alumar (–6.9%), and Zellidja (–4.0%).

USTDA names Morocco “Country of the Year”
The United States Trade Development Agency (USTDA) has named Morocco as its “Country of the Year” in recognition of progress toward higher economic growth. Key factors in the Moroccan victory over China were greater democratic freedoms and positive economic performances in spite of drought. The award comes shortly after credit rating agencies Moodys and Standard and Poors downgraded their outlook for Morocco and criticized budgetary policy.

Dissident protesters join govt workshops
Dissident members of the Kabylie protest movement, who recently met with Prime Minister Ali Benflis, have agreed to participate in workshops designed to hammer out compromises on their key demands. The workshops include a representative of the President, two representatives of the Prime Minister, and 15 members of the protest movement. A spokesperson for the dissident activists said that there would be no compromise on the El Kseur manifesto, not even on the demand that the gendarmerie withdraw from Kabylie, although the form of the withdrawal would require approval by both parties. Several riots have broken out in the Kabylie region over the last week.

Dam water levels remain low despite flooding
Water levels in the dams serving Algiers are still critically low, despite recent severe flooding in the capital that killed more than 700 people. The National Dam Agency (ANB) said that the flooding had made virtually no difference to the Algiers and Skikda dams, and that the overall Algerian dam network was filled to only 39.9% of capacity, compared to 43.1% at the same time last year. The torrential rains nevertheless did limit the decline in dam water levels for the western regions of Tiaret and Chlef.

R&D development agency to open shortly
A newly created Research and Development Promotion Agency (ANVREDET) is scheduled to open shortly with a budget of Ad30 million and three regional delegations. The agency will raise awareness of the protection of intellectual property among inventors, and will assist them in the conduct of market studies and the development of prototypes.

Falling crude oil prices force budget revision
Algerian Oil Minister Chakib Khelil has confirmed that the 2002 budget will be revised to take account of falling oil prices. The budget as approved by Parliament assumes a crude oil price of $22 per barrel, compared to the current level of around $18 per barrel, and any revisions are likely to involve sharp spending cuts. The education and health sectors are rumored to be in the firing line, as is the government’s Ad525 billion, three-year economic stimulation plan. Some observers are already expressing concern that spending cuts could threaten the government’s social development and employment creation objectives, which are intended to play a key role in reducing political tension.

The weekly trading session of December 10th 2001 produced the following results for the four listed securities:
COMPANY Aurassi Eriad Sétif Saïdal Sonatrach* * Bonds CLOSING 270 1635 585 112 CHANGE +10 +75 -30 Not Traded TOTAL VOL. in AD 1.19 million

Air Algérie implements austerity measures
National carrier Air Algérie has announced austerity measures in response to massively increased insurance premiums following the September 11th terrorist attacks. The company has already had to pay out $9 million in extra premiums, compared to the usual annual cost of $3.5 million, and has reacted by suspending its modernization plan and imposing a surcharge of Ad400 per round-trip ticket. Other measures include the cancellation of unprofitable services, and the delay of a flight simulator acquisition, although passenger traffic should be relatively unaffected because it is not dominated by tourists.

Record oil and gas revenue expected in 2001
Oil and gas revenue was $18 billion in the 11 months to November 30th, including $1.4 billion in November alone, and the projected total for 2001 is $19.4 billion – the second best result since independence. Last year the State oil and gas company, SONATRACH, reported $21.2 billion in revenue, of which more than $1 billion was transferred to foreign exploration partners. Oil revenue is expected to decline next year due to falling oil prices, and gas revenue, which is indexed to oil prices for the preceding half-year, will also be hit by the decline after being sheltered in the second half of 2001 thanks to strong first-half oil prices.

Dissidents criticize Chirac for praising govt
Several leading Tunisian dissidents have criticized French President Jacques Chirac for his recent praise of the Tunisian government. Mr. Chirac, who was on a brief visit to Tunis, praised Tunisia’s “exemplary” anti-terrorism policy and said that if other countries in the region had implemented a similar policy then there would have been fewer human rights violations. But dissidents Moncef Marzouki and Mustapha Ben Jaafar, as well as Parti Démocrate Progressiste leader Nejib Chebbi, have distanced themselves from Mr. Chirac’s comments, saying that the Tunisian anti-terrorism policy has also hurt democratic freedoms.

SIAME turnover holds steady to November
Industrial equipment company SIAME has announced a turnover of Td17.115 million for the eleven months to November 30th, almost unchanged compared to the same period last year (+0.4%). The full-year turnover forecast is for an increase of 5% compared to the year 2000.

Batam approves cash and bonus issues
Electrical appliances and whiteware retailer Batam has announced a doubling of its capital, from Td10 million to Td20 million. Just under half of the increase will be achieved through the incorporation of reserves (a bonus issue of 500,000 shares) and a cash issue of 1.5 million shares at an issue price of Td10 each.

Second GSM tender delayed until February 9

BH and TL both announce bond issues
Banque de l’Habitat is to issue Td60 million worth of BH1 bonds with an issue price of Td100 each, a gross interest rate equal to the average monthly rate plus 1.25%, and a term of seven years (the first two years interest-free). Tunisie Leasing is to issue Td10 million worth of Tunisie Leasing 2001-2 bonds with an issue price of Td100 each and a gross interest rate of 7.4% over five years. The issue has been rated A- (long term) by Maghreb Rating.

The tender deadline for Tunisia’s second GSM mobile telephony license, originally set for January 10th, has been postponed to February 9th at the request of several potential bidders. The delay was sought by Telefonica (Spain) and by Orascom, an Egyptian company that is attempting to form a consortium with local partners. The original tender for the license was cancelled in a shock decision on July 27 th, because the government was dissatisfied with the $381 million bid submitted by the Méditel consortium (which includes Telefonica). The allocation of a second GSM license is considered urgent because of an increasing saturation of the existing network that has forced a virtual moratorium on new subscribers.

Market up 7.5% on the week
Over the week ended December 14th 2001, the BVMT index and the Tunindex moved by +7.55% and +2.88% respectively. The largest increases were La Carte (+15.6%), SFBT (+14.2%), Siame (+12.0%), and SOTETEL (+10.7%), whereas the main losses were Batam (–3.5%), STEQ (–3.5%), UIB (–2.4%), and BS (–1.8%).
14/12/01 07/12/01 29/12/00 WK YTD BVMT 1018.37 946.89 1424.91 +7.55% –8.76% –28.53% Tunindex 1279.27 1243.48 1442.61 +2.88% –11.32%

EIB lends €100m for business upgrading
The European Investment Bank has awarded a €100 million credit line to 10 Tunisian financial institutions for long term loans to small-and-medium-sized businesses in the industrial and service sectors. The term of the credit line is 15 years, with a three-year grace period and an open interest rate to be fixed at each withdrawal. Tunisia is preparing for free trade with the European Union via a State-subsidized business upgrading program.

Portugal signs €100m trade promotion deal
Portugal has signed a financial partnership agreement with Tunisia under which €100 million will be made available for the purchase of Portuguese goods and services and the creation of bilateral joint venture companies. The deal was signed by Portuguese Foreign Affairs Minister Jaime Gama during a visit to Tunis that included several other agreements, covering the avoidance of double taxation, export promotion, extradition treaty ratification, and investment promotion.


Upline Research Analysts: Aïcha Tadimi, Maher Ben-Ammar, Hicham Benjilali, Carl Dawson, Dounya Boumehdi.
(*) All the information herein is believed to be reliable but Upline Securities does not warrant its completeness or accuracy. Opinions and estimates constitute our judgement and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.

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