MASI Gains Ground but Lacks Fuel for Major Breakout

Dear readers, ?

Welcome to the latest edition of "Eye on the Markets," your weekly newsletter where we provide you with a concise summary of key developments in the financial markets over the past week. ?

MASI Gains Ground but Lacks Fuel for Major Breakout

The Casablanca Stock Exchange notched a second consecutive week of gains, signaling that it hasn’t lost its footing after three weeks of profit-taking. The MASI added a modest 0.72%, closing at 14,269 points—a small but resilient rise. On Friday, a boost in mutual fund buying brought a bit of momentum, showing that the market is still alive and well, albeit cautious. But if the goal is to reach annual or historic highs, it will take more than a gentle nudge.

Trading volumes were more dynamic, reaching a total of 1.28 billion dirhams. Attention remains focused on mid-tier stocks, which continue to attract investor interest: TGCC (+6.53%), Marsa Maroc (+5.26%), and the ever-popular Jet Contractors (+2.26%), which, despite a week of minor profit-taking, continues its impressive ascent, boasting a stratospheric 485% gain year-to-date.

A Mixed October

In retrospect, October ended on a low note, with the MASI slipping 1.42%—its largest monthly decline this year. The MASI20 index also followed suit, down 1.63%. Despite this, monthly trading volumes remained solid at 6.39 billion dirhams, indicating that while cautious, the market is still active.

October’s performance saw a clear divide: on one side, standouts like Jet Contractors (+53.67%), outpacing all other gains; on the other, smaller, less liquid caps struggled to find their footing amid the bullish run, with Promopharm (-20%), Stroc Industrie (-16.10%), and Zellidja (-14.84%) trailing behind.

The absence of strong bullish drivers continues to weigh on the market, which remains in a sideways phase, occasionally inching upward but with little conviction. Operators are lying in wait, ready to pounce on any opportunity, though without strong enthusiasm. Perhaps the quarterly earnings season, set to peak by the end of November, will bring the volatility many are anticipating.

Until then, the 14,500-point level looms as an interesting technical resistance, one that bulls will keep firmly in their sights.

Market?Overview

• Stock Market: The Casablanca Stock Exchange closed the week from October 28 to November 1 in the green, with the MASI index rising by 0.62% to 14,269.96 points. The MASI.20, reflecting the performance of the 20 most liquid stocks, rose 0.88% to 1,151.86 points, while the MASI.ESG, an index of top ESG-rated companies by Moody’s ESG Solutions, gained 0.47% to 1,021.34 points.
• Bond Market: In the October 29, 2024 auction, the Treasury accepted 3 billion dirhams out of a total offer of 8.2 billion. Subscriptions included 195 million dirhams for 26-week bonds at 2.58%, 700 million for 2-year bonds at 2.78%, 330 million for 10-year bonds at 3.24%, and 1.8 billion for 20-year bonds at 3.83%. With no repayments scheduled for October 31 to November 6, the outstanding Treasury bond balance should stand at 724.8 billion dirhams by November 6.
• Exchange Market: Between October 24 and 30, 2024, the dirham depreciated by 0.13% against the euro and appreciated by 0.47% against the U.S. dollar. During this period, no foreign exchange auctions were conducted. As of October 25, 2024, official reserve assets stood at 362.4 billion dirhams, down 0.5% from the previous week but up 1.9% year-on-year.

Key Highlights

• The Boards of Banque Centrale Populaire and Crédit Populaire du Maroc convened to appoint Naziha BELKEZIZ as Director and CEO.?More details.
• BMCE Capital Global Research published its October 2024 stock guide, recommending five stocks to buy and a dozen to accumulate within its coverage universe.?Details.

Macroeconomic Indicators

• Bank Credit: +3.3% in September 2024.
• Industries: Producer Price Index down 0.1% in September.

Company Spotlight

• Preliminary, unofficial indicators suggest a strong response to the public offering, with close to 10,000 investors participating.?Details.

Trading Portfolio

No transactions recorded this week.

Historical Operations Table ??

Investor Portfolio

Launched on December 15th, 2023, the Boursenews Investor Portfolio achieved a performance of 54% as of October?11, 2024. This virtual portfolio aims to capture the stock market's performance over several months. With an initial capital of MAD 1,000,000, it consists of carefully selected stocks, reflecting a judicious balance between earnings growth potential and a robust growth strategy. ?

Technical Review

The MASI shows short-term consolidation, but bullish continuation signals are visible on both daily and weekly charts. Key levels to watch include resistance at 14,500 points for an upward breakout, with support at 14,000 points. If resistance levels are breached, the market could aim for new highs, with 14,924 points in sight.

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That's all for this week's recap. Stay tuned for more analyses and information on the financial markets. If you have any questions or would like to discuss specific topics in more detail, please don't hesitate to contact us.

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