JOHANNESBURG - The Mauritian economy has been struck by waves of adversity this year, and it’s evident in the Indian Ocean island’s stock market -- one of the worst performers in the world.
The pandemic has deprived Mauritius of the visitors who support about a fifth of gross domestic product, tipping it into the first recession for almost 40 years. To make things worse, a Japanese bulk carrier ran aground on a reef in August, polluting tourist beaches in the country’s biggest ecological disaster. And the inclusion of Mauritius in a list of countries posing threats to the European Union’s financial system because of deficiencies in combating money laundering and terrorist financing battered its reputation among investors.
The Mauritian stock exchange’s Semdex index has dropped 32% in 2020, the second-poorest performance among 93 equity benchmarks tracked by Bloomberg as of Oct. 14, and on track for its worst year since 2008 and the global financial crisis. An index of frontier emerging markets is down 17%.
“The pandemic has significantly hurt the domestic economy -- tourism has ground to a halt,” Bhavik Desai, head of research at AXYS Stockbroking, said in emailed comments. “Exacerbating the situation was the oil spill in the southeast, and the European Union placing Mauritius on its list of High Risk Third Countries.”
Of the 38 listed Mauritian companies, only five are in the green for 2020. The island’s hotel and resort operators are among the most severely hit, along with financial and banking stocks. Index giant MCB Group Ltd., which accounts for 28% of the Port Louis benchmark, is down 36%. The Semdex has fallen for seven weeks in a row, the longest losing streak since 2012.
Sentiment may get a boost once details are known of how an arm of the central bank intends to invest as much as $2 billion earmarked to help systemically important companies back to their feet, said Desai.
“In the short term, understanding where the Mauritius Investment Corporation will inject funds will offer greater clarity and offer confidence,” he said. “In the medium term, we need a clear road-map as to how the government and the private sector intend to navigate out of this unprecedented crisis.”
BLOOMBERG