Stock Market stuck in holding pattern

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. ?

Stock Market stuck in holding pattern

The stock market has been in a holding pattern for the past two weeks, and investors seem reluctant to venture beyond the yearly highs. The Masi index took another pause, ending the week just one point above its Monday opening level. The only notable "shake-up" occurred on Wednesday with an approximately 1% increase.

However, the Masi Mid and Small Cap, a thematic index that calculates the performance of small and medium-sized listed companies, stole the spotlight this week by rising 1.41% to 1,030.38 points. The real estate and construction sectors led this progress, recording respective increases of 9.12% and 3.53%, primarily in response to the official announcement of a housing assistance program for first-time homebuyers.

So, what animated this somewhat subdued week on the stock market? The macro and microeconomic agenda was packed. First, the imminent IPO announcement of CFG Bank attracted investors' attention. Inflation has dropped below the 5% mark, at least temporarily alleviating some concerns. The presentation of the draft Finance Law (PLF) was also on the agenda, with a milestone reached in terms of harmonizing VAT rates. Last but not least, the quarterly results of the largest stock capitalization, "Maroc Telecom," continued to show financial improvement.

That, in essence, marked the week on the Casablanca Stock Exchange, where volumes are relatively high (1.1 billion DH) and volatility is very low.

Now, investors will have time to analyze the impact of fiscal measures on the margins and results of listed companies in 2024.

In a broader sense, the total public sector investment effort is expected to reach 335 billion DH in 2024 (an increase of 35 billion DH compared to 2023).

Given the financing needs for the implementation of various projects and programs, and the international economic situation marked by uncertainty about global economic growth prospects, the PLF 2024 forecasts a growth rate of 3.7%, with inflation limited to 2.5%, and a budget deficit of 4%, according to the minister.

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Market Overview:

• Stock Market: The Casablanca Stock Exchange concluded this week with no change in volumes of 1.1 billion DH. [MASI: -0.01% - MASI20: +0.25%].
• Bond Market: The downward trend in primary and secondary curves remains noticeable in a context of controlled Treasury supply and inflation deceleration. In this regard, yields for 13-week, 52-week, and 2-year maturities fell by 2, 2, and 1 basis points respectively in a week, readjusting to secondary levels.
• Exchange Rate: The USD/MAD pair depreciated by -0.19%, going from 10.29 to 10.27 this week.

Key Highlights:

• The budget law proposes raising the import duty rate on hot-rolled and cold-rolled steel sheets to 17.5%. Details.
• The Casablanca Stock Exchange announced on October 20 that, in the context of continuous market monitoring and operational surveillance, and in consultation with the AMMC and APSB, it will extend random fixing periods to 3 minutes. This measure aims to optimize market efficiency and align with international best practices. Details.

Macroeconomic Indicators:

• Budget Deficit: 32.4 billion DH at the end of September
• Inflation: +4.9% in September
• 2024 Growth Forecast: +3.7% (government)

Company Spotlight:

• The Cosumar Group is approaching this new campaign with a renewed ambition focused on a program of 57,000 hectares of sugar plants for a target production of 487,000 tons of white sugar in 2024. Details.

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Trading Portfolio

No operations this week.

Historical Operations Table

Technical Review

From a technical standpoint, we maintain last week's conclusion: The Masi index is still facing resistance at the 12,300-point level. This zone poses an obstacle to further upward momentum. Despite the current consolidation, the daily chart analysis of the index identifies a short-term bullish trend.

Analysts' Recommendations:

• Valoris Securities recommends buying the stock with a target price of 142 Moroccan Dirhams, representing an upside of 36.3%. Details.
• With a target price set at 1,874 Moroccan Dirhams (compared to the previous 2,630 DH), BMCE Capital Research analysts have reduced the target price for Management while advising to maintain the stock in portfolios. Details.

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Upcoming Events

• 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!

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