Mixed Week, Overall Positive Quarterly Review

Dear Readers,

Welcome to the latest edition of "Eye on the Markets," your weekly newsletter providing a concise summary of key developments in the financial markets over the past week.

Mixed Week, Overall Positive Quarterly Review

The stock market did not find enough reasons in the quarterly reports to rebound after three weeks of declines. Consequently, the MASI index ended its weekly sequence down by 0.45% at 13,310 points. Maintaining above its major support level of 13,100 points indicates either caution or a lack of short-term initiative among operators. However, trading volumes on the central market significantly increased this week, reaching 1.10 billion DH, mainly driven by large-caps.

Quarterly results of listed companies are generally positive. According to initial estimates by the broker M.S.IN, overall revenue grew by 3.9% in the first quarter, reaching 76.8 billion dirhams, an increase of 3 billion dirhams compared to the same period last year. This performance is mainly supported by the strong momentum in the banking sector and a few individual stocks.

This positive trend occurs in a mixed economic context, marked by a slowdown in inflation in the first quarter of 2024 after the peaks reached in 2022 and 2023. The 2023/2024 agricultural season was challenging due to unfavorable weather conditions, and the month of Ramadan in March 2024 also impacted economic activity.

The banking sector was the main driver of overall revenue growth in the first quarter, with an increase of 3.9 billion dirhams. It was followed by the insurance sector, which recorded a rise of 497.2 million dirhams (+6.4%), thanks to the strong performance of Life and Non-Life activities. The health sector came in third, with additional revenue of 231 million dirhams (+60.8%), driven by the sector's sole stock, Akdital, which benefited from its geographical expansion.

Top & Flop Sectors of the First Quarter

As the season ends, it's time to review: which sectors saw their revenues soar in the first quarter, and which experienced a decline? Here's an overview.

At the top of the list, the health sector, represented by Akdital, improved its revenues by 60.79%, reaching 611 million DH. This growth is largely due to the contribution of establishments opened in 2023.

Just behind, the banking sector recorded a net banking product increase of 21.6%, amounting to 22 billion dirhams. This success was fueled by stable interest rates and the excellent health of the financial market.

On the third step of the podium, real estate confirmed its performance on the stock market (+122% YTD) and generated sector revenue of 1.39 billion dirhams, up 21.55%.

Finally, the port sector, represented by Marsa Maroc, benefited from a sharp increase in handled traffic to record a revenue rise of 13.55%, reaching 1.14 billion dirhams.

Conversely, the chemical sector suffered the most significant revenue decline, led by SNEP. The company's revenue dropped by 58.70% in the first quarter, due to the start-up phase of its new production capacities.

Despite a 16.8% improvement in its profits, Taqa Morocco (electricity sector) saw its revenue decrease by more than 27%, impacted by the decline in coal prices on the international market.

The forestry and paper sector, represented by Med Paper, recorded a 26.98% drop in revenue, ranking third among the least performing sectors.

Finally, the mining sector closed this bottom ranking with a revenue decrease of 9.32%.

Market Overview

• Stock Market: The Casablanca Stock Exchange ended the week from April 27 to May 3 on a negative note, with its flagship index, the MASI, dropping by 0.45% to 13,310.40 points. The MASI.20, an index comprising the 20 most liquid stocks, fell by -0.24% to 1,072.92 points, and the MASI.ESG, an index of companies with the best ESG ratings as published by Moody's ESG Solutions, declined by -0.41% to 965.22 points.
• Bond Market: The Treasury conducted three borrowings on the 2-year, 10-year, and 15-year lines from May 22 to May 29 for a total amount of 2.6 billion dirhams (MMDH), according to BMCE Capital Global Research (BKGR). These borrowings were made at respective limit rates of 3.277%, 3.787%, and 4.228%, inducing a slight increase in the 10-year primary rate by +1 basis point (bps).
• Foreign Exchange Market: The Dollar depreciated against the Dirham by -0.11% this week, from 9.97 to 9.96, reaching a nearly 4-month low. This evolution is mainly due to a negative liquidity effect, which stood at -0.25% following an improvement in Dirham liquidity relative to foreign currencies. The basket effect, on the other hand, was positive at +0.14% after the Dollar appreciated against the Euro this week, according to AGR.

Key Highlights

• Morocco is launching several major projects expected to boost growth, with investments estimated between 100 and 150 billion USD by 2030. Details to follow.
• At the second edition of Gitex Africa Morocco 2024, Bank Al-Maghrib's (BAM) Director General Abderrahim Bouazza unveiled the Bank's strategy to accelerate the adoption of digital payments in Morocco. Details to follow.

Macroeconomic Indicators

• Industries: Increase of the IPPIEM by 0.1% in April 2024.
• Growth: +3.5% in 2024 (forecast by BAD).

Company Spotlight

• Ciments du Maroc shareholders met on May 29, 2024, as convened by the Board of Directors in an Annual General Meeting and decided to increase the unit dividend by 10 DH per share. Details to follow.

Trading Portfolio

No transactions recorded this week.

Investor Portfolio

Launched on December 15, 2023, the Boursenews Investors Portfolio achieved a performance of 32% as of May 24, 2024. This virtual portfolio aims to capture the stock market performance over several months. With an initial capital of 1,000,000 DH, it consists of carefully selected stocks, reflecting a judicious balance between profit growth potential and robust growth strategy.

Technical Analysis

Graphically, the MASI has not been able to re-enter its upward channel and continues to trade below its 20-day moving average (MA20). In the very short term, the bias is bearish. A return of prices above the 20-day MA would neutralize the trend. Conversely, breaking the major support at 13,100 points would heighten concerns among chartists and pave the way for a deeper correction.

Also, check out our news feed to stay updated on market news.

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 wish to discuss specific topics in more detail, feel free to contact us.

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