One Step Back, Two Steps Forward?

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. ?

One Step Back, Two Steps Forward? ?

Hold the celebration... just for a moment! After three weeks of strong gains, the market momentum has cooled off, allowing the Casablanca Stock Exchange to take a breather, reminding us that you can’t climb a mountain all in one go. The Masi ended the week down 1.95% at 14,167 points, shedding 280 points. This pause, resembling “one step back, two steps forward,” paves the way for an assault on historical highs and, more importantly, has given investors the chance to take well-deserved profits on several stocks.

The trading week unfolded in two phases: first, a correction phase with widespread profit-taking that slightly slowed the pace and brought the market back to the symbolic 14,000-point threshold. Then, a rather strong rebound on Thursday, which tested the bullish investors' resolve as they approached that pivotal 14,000-point mark.

So, did investors fear a climb that was too fast and too steep? Perhaps. Caution appeared to be the name of the game, with carefully calculated profit-taking. But the silver lining lies in the reaction of the bulls: their swift commitment at this strategic pivot provided a solid anchor for the market to contemplate future rallies.

Meanwhile, the half-year earnings season is over, leaving behind a mixed picture. While revenue growth is a positive sign, the overall net profit of listed companies saw a slight dip of 1.2%, down to 17 billion dirhams. This underperformance is primarily attributed to Maroc Telecom, which reported a loss of 1.3 billion dirhams due to provisions related to a 5.9 billion dirhams dispute with Wana Corporate. However, excluding the impact of Maroc Telecom, the view is much brighter: the adjusted net profit shows a significant rebound of 26%, testifying to the overall health of other listed sectors.

It would be impossible not to mention the undeniable star of the week—and the year—Jet Contractors. The stock price soared by 25% in just one week, with a total volume of 93 million dirhams traded. Year-to-date, the share has posted a spectacular performance of 357%, making it the market’s top performer. A rocket on the rise, whose final destination is still unknown.

In the end, the 14,000-point support level held firm, the correction gave the market a breather... Now it remains to be seen whether the bulls will have enough stamina for a renewed push, or if the 2008 highs will remain out of reach. For now, the suspense is high.

Market?Overview

• Stock Market: The Casablanca Stock Exchange closed the week from September 30 to October 4 on a downward note, with the main MASI index dropping 1.95% to 14,167.03 points. The MASI.20, reflecting the performance of the 20 most liquid companies, fell by 2.43% to 1,140.87 points, and the MASI.ESG, an index of companies with the highest ESG scores as published by Moody's ESG Solutions, declined by 2.05% to 1,016.43 points.
• Bond Market: In the Treasury auction on October 1, 2024, the Treasury accepted 600 million dirhams out of a total offer of 4 billion. Subscriptions included 100 million dirhams for 13-week bonds at a rate of 2.49% and 500 million for 2-year bonds at a rate of 2.84%. Considering a repayment of 400 million during the period from October 3 to 9, the outstanding Treasury bond balance should stand at 722.2 billion dirhams by October 9.
• Exchange Market: Between September 26 and October 2, 2024, the dirham remained stable against the euro and depreciated by 1.17% against the U.S. dollar. During this period, no foreign exchange auction operations were carried out. As of September 27, official reserve assets stood at 367.5 billion dirhams, up 0.9% from the previous week and 3.4% year-on-year.

Key Highlights

• Despite a slight drop in overall net profit due to exceptional items, notably Maroc Telecom's provisions, the half-year results of the Casablanca Stock Exchange reveal the strength of the banking sector, which more than compensates for this decline and drives overall growth. More details.
• Twenty-one accountants who participated in the "Capital Market Financing Strategies" training received their certifications on Tuesday at the Casablanca Stock Exchange. This initiative, launched earlier this year in partnership with the Order of Chartered Accountants (OEC), aims to make these professionals ambassadors for businesses. Details.

Macroeconomic Indicators

• Cement: Sales up by 6.88% at the end of September.
• Foreign Trade: Drop in indices in Q2 2024.
• Growth: 2.4% in Q2 2024.

Company Spotlight

• The strong demand for PowerCARD V4, the rise of the SaaS model, and the integration of CR2 position HPS for sustainable and profitable growth. While current investments temporarily weigh on margins, they are setting the stage for exponential profitability and solid recurring revenues.?Details.

Trading Portfolio

No transactions recorded this week.

Historical Operations Table ?

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Investor Portfolio

Launched on December 15th, 2023, the Boursenews Investor Portfolio achieved a performance of 54% as of September?30, 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 confirms its upward trend with a clean pull-back on the former resistance zone of 14,000 points, which now serves as a key support level. This move validates the strength of this technical threshold and provides a favorable base for further gains. The immediate target is around 14,800 points, according to the weekly Elliott Wave count, which aligns with the market’s current momentum. However, caution is warranted. If the market continues its advance, consolidation zones could form, which is typical during a trend-building phase. The 20-week moving average (MA20) also provides support, acting as a dynamic floor and offering additional technical backing for investors. As long as these levels hold, the sentiment remains bullish, with potential for the trend to extend further.

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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!

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