SGTM's Remarkable Market Debut
Since its initial public offering (IPO), SGTM has experienced a remarkable surge in its stock price, more than doubling in value within a matter of days. This rapid increase has been fueled by strong investor enthusiasm.
Many investors were eagerly anticipating the first 'free' trading session to adjust their positions—either by increasing their purchases for mutual funds that had missed out during the IPO or by taking profits after the stock's spectacular rise.
Unprecedented Trading Volume
On Friday, this anticipation translated into an extraordinary volume of trades. SGTM saw nearly 19,000 contracts traded, amounting to approximately 2 million shares exchanged. In stark contrast, Attijariwafa Bank recorded only 146 contracts, while Addoha, one of the market's most liquid stocks, saw just 413 contracts.
This level of activity was unprecedented and placed significant strain on several online trading platforms. Many retail investors found themselves temporarily unable to place or modify their orders due to technical malfunctions.
Record-Breaking Trading Activity
The total trading volume on the Casablanca Stock Exchange exceeded 27,000 contracts, setting a new historical record for contracts traded, surpassing the previous record established in 2007 during Snep's initial listing.
It appears that certain brokerage platforms were unable to handle such a high volume of simultaneous requests, resulting in many investors being unable to react as swiftly as they desired, particularly when SGTM's stock began to decline after trading commenced.
Investor Frustration and Market Dynamics
These disruptions led to significant frustration among investors, which was widely expressed on social media. Some speculated about potential anomalies or deliberate manipulation; however, market professionals dismissed any notions of foul play.
It is common for the first trading session following an IPO to experience opportunistic selling pressure, as some investors seek to quickly realize their gains, especially after a rapid price increase like that seen with SGTM.
In this instance, the scale of the operation and the magnitude of unrealized gains intensified this selling trend. Consequently, SGTM closed the session down 10%, although it still maintained a performance exceeding 100% compared to its IPO price.
Overall Market Pressure
Simultaneously, Friday's trading session proved challenging for the broader market. The MASI index fell by 2.45%, driven by significant sell-offs in several large-cap stocks.
This decline can be attributed to various factors, including cash withdrawals from mutual funds, particularly Medium to Long-Term Bond Funds (OMLT), by institutional investors.
These OMLT funds, which can allocate up to 10% of their assets to equities, were compelled to sell shares in response to these requests. Such withdrawals were again linked to closing operations of real estate investment funds (OPCI), a trend that had previously impacted the market earlier in the quarter.
Moreover, given SGTM's significant weight in the MASI (approximately 4%), mutual funds were required to purchase substantial quantities of the stock to align with their benchmark index, forcing them to reduce other holdings to free up liquidity, further weighing on the index.
These selling pressures from mutual funds were not absorbed as effectively as usual, due in part to the overall bearish sentiment in the market and the technical disruptions on online trading platforms, which limited investors' ability to position themselves quickly for purchases.