The fall in the Casablanca stock market accelerated at the end of the session on Friday, June 17, thus reflecting the fears and the wait-and-see attitude of investors as to the evolution of the key rate, according to the explanations of a member of the management board of a local brokerage firm. To analyse.
The Moroccan stock market continues to decline. Just at the close of the session on Friday June 17, the MASI dropped 1.4% to fall to 12,083.57 points, thus bringing its cumulative decline since the beginning of 2022 to 9.5%.
MSI20, the index comprising the 20 most liquid stocks in the market, lost 1.38% to 975 points. Its decline in YTD exceeded 10%. The MASI timidly recovered 0.4% on Monday, but this development took place after the exchange of a small volume of only 17.3 MDH.
The volume that accompanied the drop observed on Friday was 162 MDH, drained mainly by Maroc Telecom (26.6 MDH).
Note that the overall market capitalization fell from 690.7 billion dirhams on December 31, 2021 to 632.7 billion dirhams on Friday, i.e. 58 billion dirhams have evaporated since the start of this year.
Remember that the market corrected slightly upwards a few weeks ago after closing 6 consecutive sessions on an appreciation. But as Bachir Tazi, director of CFG Bank Capital Markets, told us: “There are small positive signals here and there that can fuel this kind of positive progress in the short term, but the trend remains very uncertain in the short and medium term.
What continues to fuel the market decline? Contacted by LeBoursier, a member of the management board of a local stockbroker explains: “There were a few back and forth transactions at the end of last week. Some institutional investors have opted for this type of operation in order to readjust their portfolios. This explains the increase in volumes traded. An increase that reinforces the general downward trend of the market.
The decrease observed at the end of last week is linked, according to our interlocutor, to the investor expectations in relation to the decisions that will be taken during the Board meeting of Bank Al-Maghrib, which is being held on Tuesday, June 21, in particular with regard to the key rate.
” Investors eagerly await the Board of Bank Al-Maghrib. The decisions that should be unveiled tomorrow [mardi 21 juin] will be decisive for the development of the financial market. There are a few investors who expect the key rate to rise. And that negatively influenced the market.”
What would be the impact of a possible increase in the key interest rate on the market?
A possible increase in the key rate would not be very favorable for the market.
“A rise in the key rate would reflect a tightening of the country’s monetary policy. The Central Bank would slightly reduce its interventions in the market. The cash available at banks and institutions would decrease. Under these conditions, institutional investors would intervene less and less on the market”, estimates our interlocutor.
And to add: “A possible increase in the key rate would obviously impact the yield curve. This will influence returns on bond assets. The rise in the rate would also automatically imply a fall in investment and the distribution of loans. This context would impact the profitability of listed companies”.
Apart from the disturbances observed at the international level, combined with the rise in inflation in Morocco as everywhere else; the next change in the key rate would have a significant impact on the market.