Stock Market: An Unrelenting Bullish Momentum

The stock market is experiencing a prosperous period that has lasted nearly two years. All indicators are positive, whether it’s the overall market index, trading volumes, market capitalization, or the performance of listed companies… Since the beginning of the year, the Masi index, soaring from one record to another, has grown by 26%, surpassing 18,000 points.

As for trading volumes, they show a daily average of nearly 500 million dirhams (MDH), more than double compared to last year. Market capitalization, after declining due to profit-taking by retail investors in particular, has started a renewed upward trend, reaching 971 billion dirhams.

BMCE Capital’s Analysis and Research team expects this bullish cycle to continue. It is projected to persist as long as all indicators remain positive. According to Khadija El Moussily, Head of Equity at BKGR, “The trend is expected to continue this year and will be supported by various factors, starting with the improvement in the macroeconomic environment, which itself will be driven by the strong performance of non-agricultural activities and the momentum of domestic demand.”

Indeed, global and national economic institutions forecast an economic upturn in 2025, with growth projections of 3.8% from the HCP (High Commission for Planning) and OCE (Economic, Social, and Environmental Council), and 3.6% from the World Bank, while the global economy is expected to grow by 2.5%.

Banks, Construction, Healthcare… The Standout Sectors

In this context, several sectors are distinguishing themselves both in terms of performance and stock market behavior, starting with banking.

Indeed, “the sector continues to deliver strong results, driven by the ongoing investment momentum and a low-interest-rate environment,” adds El Moussily, who remains optimistic and advocates directing savings toward more profitable investments, including the stock market.

In addition to banking, the construction (BTP) and real estate sectors are also expected to perform well, offering promising prospects due to accelerated projects linked to hosting the 2025 Africa Cup of Nations (CAN) and the 2030 World Cup.

“The healthcare sector is poised to stand out, fueled by the solid performance of established entities and the impact of recent hospital expansions,” explains El Moussily. Beyond these sectors, other companies are expected to shine, such as Managem, which is likely to benefit from the positive trends in base metals and precious metals.

Under these conditions, BKGR forecasts a 29% increase in profit capacity for 2025, reaching over 47 billion Moroccan dirhams (MMDH). This projection excludes the non-recurring fine imposed on Maroc Telecom. Adjusted for this exceptional item, the profit pool would still rise by 11%. As a reminder, in the first quarter of this year, the cumulative revenues of listed companies totaled 81.1 billion dirhams, a 7.2% increase compared to the end of March last year.

A Still Attractive Valuation

The growth in the stock market’s profit pool, coupled with a notable rise in share prices, indicates that the equity market continues to maintain attractive valuation levels. Indeed, the price-to-earnings (P/E) ratio stood at 20x in 2024 and is projected at 21.6x in 2025—a level deemed attractive and “reasonable” compared to historical averages, which should continue to appeal to investors of all types.

Another critical factor to highlight is the persistently low bond yield environment, which is unlikely to change in the near term. For months, the Treasury has been in a comfortable position, with announced funding needs capped at 3 billion dirhams (MMDH) in March and 6 billion dirhams in April.

In June, the state’s financial authority announced a funding requirement of 14.5 to 15 billion dirhams for the month, of which 10 billion dirhams have already been raised smoothly, with no significant shifts in interest rates. Since the start of the year, rates have declined by 33 basis points (bps) for the 13-week maturity (to 1.95%), 52 bps for the 2-year maturity (to 2.10%), and 56.3 bps (to 3.03%) for longer tenors.

This trend is expected to persist, with investors closely monitoring the central bank’s upcoming meeting, anticipating a further cut in the benchmark interest rate. Such a scenario would further benefit the Treasury by reducing its borrowing costs, especially with 15 billion dirhams in debt maturities due over the next two months.

Increased Liquidity on the Horizon

Another positive factor to highlight is the range of new financial products set to enhance market liquidity, such as the “Masi20 Futures” contract.

“With this type of product, Morocco will no longer be seen as a one-directional market, as investors will be able to take both long and short positions,” explains Majd Guebbas, CEO of BMCE Capital Bourse.

He adds: “Foreign investors, who are known for favoring these types of instruments, will show greater interest in the Moroccan stock market, thereby helping to inject more liquidity.”

What About Listed Mutual Funds (OPCVM) or ETFs?

The upcoming law on collective investment funds (OPCVM), currently in the legislative process, is expected to breathe fresh momentum into the equity market by paving the way for exchange-traded funds (ETFs). These funds, which will be listed like stocks, will allow investors to track an index, sector, or specific strategy.

Investors will no longer be forced to buy all the stocks in an index but can instead purchase an ETF, which offers a simpler and more cost-effective way to gain exposure. Notably, “globally, passive management now surpasses active management in terms of assets under management.

These ETFs are expected to double the size of assets invested in the equity market,” says Guebbas. This trend has been observed in international markets following the launch of ETFs.