Corrections quickly erased, sign of a solid underlying trend

Corrections quickly erased, sign of a solid underlying trend
Corrections quickly erased, sign of a solid underlying trend

On the stock markets, profit taking and corrections are inevitable phenomena, decompression chambers necessary for a lasting and healthier rise. But on the Casablanca Stock Exchange, these upheavals seem to have lost their nuisance power this year, and are failing to really slow down the ongoing upward momentum, despite technical indicators which could sometimes suggest the opposite.


The longest correction lasted only 10 sessions
Buoyed by an increase of 10% over the year, boosted by the solidity of company results and good macroeconomic prospects, investors display unfailing serenity in the face of market adjustments. The profit taking observed recently had only a limited and short-lived impact (9 sessions for the longest bearish phase, as visible in the graph below). Should we see this as a sign of a solid underlying trend, supported by unshakeable investor confidence?

Several converging factors explain this behavior. First of all, the micro-economic signals emanating from listed companies remain generally encouraging and confirm the solidity of the prospects for almost all sectors. The upcoming quarterly publications should reinforce this positive trend and fuel investor optimism, especially since comments from business leaders, both during annual press releases, results conferences and in annual financial reports show a real optimism of leaders.

This dynamic also takes place in a rather calm and predictable bond market context, supported by the financial comfort of the Treasury. E

Thus, operators seem to have taken stock of the long-term potential of the stock market this year, supported by encouraging macro and microeconomic signals and a favorable market context.

Financials act as stabilizers

And if corrections can occur at any time, they should not call into question the underlying upward trend which characterizes the market. For patient and disciplined investors, these downturns offer valuable purchasing opportunities to strengthen their exposure to certain issues. And from a general point of view, while the Masi Small & Mid Cap is experiencing one of its best years thanks to real estate and construction, the banking sector plays the role of central defender of the overall valuation of the market. Bank stocks indeed display low P/Es, which allows the stock market to remain well valued overall. It took a small boost from the banks over the last two weeks, with investors positioning themselves before the quarterly, to allow the Masi to cross 13,500 points without difficulty.

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