The MASI remains steady after BAM's decision and speech

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. ?

The MASI remains steady after BAM's decision and speech

?No surprises for investors this time. As anticipated, the central bank has decided to tick the "No change" box on the benchmark interest rate. It has therefore extended its pause on monetary policy, with a now positive narrative on inflation, both medium and long-term inflation expectations, and growth, which has been revised upwards. "The Council also noted that medium and long-term inflation expectations experienced a significant decline in the third quarter of 2023...," the Council stated on this matter.

For now, the only concern is that the central bank's various macroeconomic expectations do not include the economic impacts of the earthquake or the measures the government should adopt in the 2024 budget. Furthermore, there is always the possibility of inflation rising again, given the volatility of the international energy market. Hence, the interest in holding more frequent meetings, similar to the ECB and the Fed, to keep an eye on economic developments. BAM, in fact, has stated that its future decisions, particularly in December, will take into account the economic and social impact of the earthquake.

In short, the stock market currently sees the interest rate ceiling being reached and anticipates a return to a more accommodative monetary policy in the near future. The bond market is moving in the same direction, albeit less exuberantly but still in the same direction. In any case, all signals are pointing in the same direction.

On the front of semi-annual results, the latest round of publications has come to an end. There is a bit of everything in the scorecard. Some reports show solid growth with double-digit profits, while others are less favorable, generally impacted by exchange rate fluctuations. Investors had the entire weekend to analyze the numbers and draw lessons from them.

Market Overview

• Stock Market: The Casablanca Stock Exchange closed the shortened week with a gain on volumes of MAD 444 million. [MASI: +0.74% - MASI20: +0.53%].
• Bond Market: The Treasury raised MAD 3.47 billion this week out of MAD 8.29 billion offered by investors. Different maturities (from 2 years to 30 years) saw their yields decrease. Given the earthquake's impact on economic activity and the state's public finances, analysts remain attentive to the Treasury's short-term needs.
• Exchange Rate: The USD/MAD pair appreciated slightly by +0.04% to 10.27 compared to 10.26 a week ago, marking the highest level since last March.

Key Highlights

• On September 27, 2023, the National Accounting Council issued Opinion No. 27 on the accounting treatment to be reserved for contributions to the 126 Fund, based on the Permanent Committee's proposal. More details.
• According to Fitch Ratings, the reconstruction efforts following the earthquake that struck Morocco in early September will lead to an increase in public spending, widening short-term budget deficits. However, international assistance should partially offset the pressures related to reconstruction costs, and higher remittances will further support external liquidity.?More?details.

Macroeconomic Indicators

• Benchmark Interest Rate: 3%
• IPPIEM (Industrial Producer Price Index for Energy and Mines): +0.1% (August 2023)
• Growth: 3.1% in 2023 (BERD Forecast)

Company Spotlight

• The auditors of Groupe Alliances have removed a reserve on the accounts of the subsidiary Alliances Darna, which has been present in the accounts since 2015. The company reported a net profit of MAD 106 million (+43%), representing a net margin of 10%. Its subsidiary, Alliances Darna, specializing in the field, saw its profitability increase by 16% to MAD 162 million.?More details.
• The first half of 2023 did not meet Sothema's sales expectations. However, "starting in July, supplies returned to a normal pace, and we were able to increase our sales. We anticipate growth for the year 2023," explained management. More details.

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Trading Portfolio

No operations this week.

Historical Operations Table?

Technical Review

On a daily timeframe, the price is experiencing a rebound from the previously identified support level at 11,700 points. The breakout from the short-term bearish channel, as depicted on the chart, represents a positive signal for a sustained bullish recovery.

Analyst Recommendations

• BMCE Capital Global Research has raised the target price for HPS to MAD 7,818 from MAD 7,185 and continues to recommend buying the stock in portfolios.?More details.
• In a note marking the initiation of coverage of Akdital, CFG Bank analysts value the stock at MAD 534, representing a potential appreciation of up to 20% over 24 months, and recommend buying it.?More details.

Earnings Releases

- Find here all the semi-annual results of listed companies published this week.

- Also, take a look at our Newsfeed to stay updated on market news.

Upcoming Events

• Annual Meetings of the IMF & World Bank - October 9 to 15 (in Marrakech)
• Next meeting of the Bank Al-Maghrib Council - December 26, 2023

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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.

Thank you for subscribing to Eye on the Markets, and have a profitable week!