EQUITIES CONFIRM THEIR STRONG SENSITIVITY TO BONDS...
The orientation of the stock market in recent years confirms, in our opinion, its high sensitivity to bonds. In 2022, the bullish reversal of the yield curve in Morocco was accompanied by an annual underperformance of the MASI index of -20%. In January 2023, the appreciation of the 10-year TBs from 3.19% to 4.21% was accompanied by a weekly stock market correction of -9.4%, the worst in its history.
Following the Moroccan Central Bank’s decision to take a pause in its monetary tightening process last June and in the absence of budgetary pressures (see Moroccan Public Budget 2023), we witnessed a visible easing of the yield curve from Q2-23 (see Semi-annual Fixed Income Market H1-23). Indeed, the 10-year TBs fell by -45 BPS from 4.70% in May to 4.25% at the end of July 2023. A situation which was accompanied by a solid recovery of the MASI index, i.e. +15.0% during the same period.