Rate hikes, geopolitical unrest, economic ills and inflation…2022 will have been a vintage that stock market operators will quickly want to forget. The Casablanca Stock Exchange will end 2022 with an underperformance of 19.75% (-21% for the MSI 20) once morest an increase of 18.35% recorded in 2021. The worst performance in its recent history with nearly 127 billion of capitalization DH gone up in smoke. A record.
Despite inflation showing the tip of its nose and interest rates quivering, there was no sign of such a mediocre stock market year at the start of 2022. The proof is that on January 10 the MASI gained up to 5% around 14,000 points (not far from its historic highs of 2008). However, Russia’s invasion of Ukraine at the end of February dashed all hopes of short-term capital gains and even of a new bullish year. The stock market reacted quickly with a MASI dropping up to 17% of its value between the months of February and July. Then a summer without a clear direction before dropping out once more in September following the first rate hike dictated by Bank Al-Maghrib.
It must be said that during this historic year, the main driver of the financial markets has always been the change in the monetary policy of the Central Bank, like what is happening almost everywhere in the world. Traders have tried (and are still trying) to guess when the peak of the uplift in current rates will occur, and at what altitude. From September, the more severe tone of Bank Al-Maghrib took investors by surprise, who initially found it difficult to integrate the paradigm shift on interest rates.
With each announcement of a key rate hike by BAM, the tentative rebound in equities was frozen, as was the case during the last week of December.
This year, all companies, large and small (apart from a few exceptions such as mines), have been penalized, the drop in activity suffered weighing heavily on the level of expected profits. At the time of writing these lines, only 4 sectors out of the 24 sides are posting positive variations. These are “Electricity” (+4.57%), “Leisure and hotels” (+3.87%), “Mining” (+32.73%) and “Forestry and paper” (+25.35). %).
We ended the year close to annual lows at 10,720 points, with an overall valuation down significantly to 17x once morest 19.8x on average for the 5 years before the Covid crisis. For its part, the liquidity ratio of the stock market at the end of November stood at 8.51%, down 13.2% year-on-year, while average volatility fell to 9.4% once morest 10.8% at the end of November. first half of 2022.
Furthermore, with deteriorating investor confidence, this year’s stock market crisis has also shown us that yield stocks – those appreciated for their ability to pay comfortable and recurring dividends – no longer constitute an effective bulwark once morest falling prices. They certainly fell less than the most cyclical stocks on the stock exchange, but they suffered from fears of a decline in earnings which might compromise their ability to maintain their dividend. In short, you will have understood that there were few hiding places where investors might find refuge this year.
Stock market: The star values of a year of crisis
Asset management: Let’s quickly turn the page
Risk everywhere, returns nowhere. Here is what characterized the asset management industry in contrast to 2021 which was prolific for savings and investments. Mutual fund managers have somehow limited the damage and let the storm pass while waiting for better days.
The UCITS sector was thus impacted by the drop in the stock market and by the upward tensions on the interest rate market and suffered an outflow in the categories of UCITS MLT bonds, CT bonds and equities. The overall net assets of UCITS stood at MAD 536.5 billion as of December 9, 2022, down 9.5% compared to the start of the year.
The other asset management compartments achieved growth in line with those observed in previous years, with a stabilization of assets under management for securitization funds and two- and three-digit growth for OPCCs and OPCIs respectively. The net assets of OPCIs thus reached MAD 49 billion at the end of October 2022, up 127% since the start of the year, with a preponderance of funds reserved for qualified investors.
Rates: the bearish fuel for equities
In 2022, all the newsflow from the bond compartment had an immediate impact on the equity market, which priced in a faster-than-expected rise in bond rates. The MASI suffered violent dropouts during certain sessions. These negative elements also complicated the task of equity managers who, to save the day, had no choice but to reduce their exposure as much as possible.
Bond market: What to expect in 2023?
In the end, we remain in a configuration where investors hope that the stock market low point has passed, despite the vagueness that still reigns over the economic outlook and also over the annual profits of listed companies, which will no doubt be impacted by the inflation. For 2023, we will therefore have to be extremely rigorous in the choice of stocks, knowing that the volatility, which will remain high at least until next year, will not make the task any easier.
The most optimistic hope that next March, with the results of companies and the BAM Board, will constitute an inflection point where the worst will be behind. But until then, watch out for the tremors.
Youssef Seddik.
