ABSTRACT
Morocco has one of the region's most accessible stock markets, with no restrictions on foreign participation and no taxes on dividends or capital gains. But despite an increase in capitalization from $600 million in 1990 to $8.6 billion in 1996, the exchange suffers from a chronic lack of liquidity. This is due to substantial institutional shareholdings, mainly by local insurance companies which are discouraged from trading their portfolios by heavy taxation of capital gains. A government decision in 1996 to reduce this tax burden has yet to be translated into liquidity on the market.
