The Casablanca Stock Exchange has kicked off 2025 with an exceptional surge, as the MASI index climbs 12.67% in just a few weeks. This impressive rally reflects a market driven by strong technical factors and growing investor confidence. In response to this momentum, BMCE Capital Global Research (BKGR) has revised its equity risk premium (ERP), opting for a survey-based approach at 6.50%, which it deems more in line with current market conditions.
The previous year set the stage for this bullish trend, marked by two consecutive interest rate cuts by Bank Al-Maghrib. These reductions made credit more accessible, fueling investment in the stock market. Additionally, a government-initiated tax amnesty program led to a significant influx of capital, further deepening market liquidity. Several structural projects have also contributed to the positive outlook, including Morocco’s co-hosting of the 2030 FIFA World Cup, the expansion of gigafactories, and the implementation of social assistance programs—all of which are stimulating economic activity and boosting the profitability of listed companies.
BKGR’s decision to set the ERP at 6.50% is based on several key observations. First, the steady rise in corporate earnings, with profits expected to jump 22.7% in 2025. Second, record-breaking trading volumes, which soared to 536 million dirhams in January 2025, more than doubling the 229 million recorded in the same period the previous year. Lastly, the growing presence of retail investors is injecting fresh energy into the Casablanca Stock Exchange.
Despite this optimism, BKGR warns of a potential market correction in the first half of 2025, following a staggering 41.4% surge over the past 17 months. However, monetary policy decisions by Bank Al-Maghrib could play a decisive role. Further interest rate cuts this year could make equities even more attractive compared to bonds, reinforcing the stock market’s appeal. For now, investors are closely monitoring corporate earnings for 2024, which will either confirm or cool down the current market enthusiasm.
