After a sharp correction following the rise in bond rates in January, the MASI was able to catch up and regain a point of balance during the week of February 6 to 10. This recovery can be explained by several factors. Details.
Since the beginning of the year, the MASI has experienced a particularly eventful evolution. It should be recalled that the first week of January marked the largest decline in its history.
On this historic decline, Bachir Tazi, Managing Director of CFG Capital Markets, explains that “the correction observed in early January was severe and brutal. It comes from a mechanical impact of the adjustment of the yield curve. That’s all quite normal, because this led to a depreciation of assets, an increase in the equity risk premium and therefore a readjustment of equity exposures”.
But in recent days, the Casablanca index has found an upward curve.
Source : medias24.com
A rise which challenges, in a context of still high rates which generally diverts investors from the equity market. “The trend in the rates market is that we are still in a relatively bullish context in the short and medium term. There is consensus on the fact that at these deadlines, the tension is not over. However, on the part long of the curve, the biggest is behind us. There is also a consensus on a continuation of the monetary tightening of Bank Al Maghrib (BAM) in the short and medium term”, continues our interlocutor.
But then, how to explain this rebound of the MASI?
A relaxation on the rate of increase in rates
One of the first factors that contributed to the slight recovery of the MASI was the injection of liquidity into the Treasury bond market. The Central Bank had indeed launched a 25 billion dirhams program to boost demand. “Interventions by the Central Bank on theopen market have made it possible to inject liquidity into the market and relieve operators”, explains our interlocutor.
A postman who accompanied himself a few weeks later a slowdown in interest rate increases in the bond market. “The latest auctions made by the Treasury showed a certain relaxation, in the sense that the Treasury had more flexibility to raise the amounts it wanted. And above all, the other indicator is the evolution of interest rates , which no longer progress in the same way at each auction and are beginning to settle,” continues our source.
The market was also reassured by a number of good news that prompted investors to position themselves in the equity market.
And newsflow positive
Firstly, during a symposium of the Council for Development and Solidarity (CDS) held in Rabat this week, the Wali of BAM, Abdellatif Jouahri, made generally positive statements on the economic situation of the Kingdom. “He clearly indicated that the Central Bank was calm and gave a positive signal in relation to signs of a slowdown in inflation, which have also materialized internationally, in the short and medium term”, explains our interlocutor.
For him, the market also anticipates better agricultural achievements than last year. “Rainfall is significantly better than at the same period in 2022; this is therefore seen as good news by the market”, explains Bachir Tazi.
One of the other events awaited by the market concerns the decision of the FATF on the removal of Morocco from the gray list. Although no decision has been rendered officially, the echoes seem positive following the visit carried out by the FATF last January. “According to the echoes of the market, this visit went very well. It might lead to Morocco leaving the gray list”, explains Bachir Tazi.
If this exit materializes, the reactions will indeed be positive on the equity market. This is explained by the fact that there will be a better opportunity for the Treasury to make an international exit which, mechanically, will cause an easing on the domestic market. In finethis will attract investors to the stock market.
A return of foreign investors since 2023
The market decline that occurred in 2022 with the MASI down almost 20%, and then the decline that occurred in January, however, had a positive side. “This has notably made it possible to put Morocco back on the radar of foreign investors”, Bachir Tazi confides to us.
Indeed, Morocco has had the reputation for several years of being an expensive market trading at high multiples. A subject that is debated in the financial class. “Foreign investors have a much more global vision than Moroccan investors, who have regulatory constraints. They can arbitrate between several markets,” explains our source.
Now, those gripes have been pushed aside as multiples have fallen to around 16x earnings from just over 20x earnings over the past 15 years. “After this correction and this decline in multiples, they manifested themselves”, notes the CEO of CFG Capital Markets. “Since the beginning of the year, we have been solicited on a much more regular and intense basis. Some interest has arisen, with foreign interlocutors who are organizing calls, planning meetings, etc. Some of them have already started to implement lines on the national market”, concludes Bachir Tazi.
