The main index of the Stock Exchange of Mauritius (SEM), Semdex, plunged by 0.4% to conclude the second quarter of the year at 2,084.7 points, continuing the slide from the first quarter and reinforcing the weak trend this year.
The report by Anglo-Mauritius stockbrokers also highlighted that hospitality majors shall remain in the limelight throughout the next quarter, with the market eying the Rs 1.2 billion rights issue of Sun Resorts and Sun’s acquisition of Alteo’s 50% stake in Anahita Hotel Limited, a Four Seasons resort.
Market turnover on the official market amounted to Rs 5 billion, mainly geared towards exchanges over the twin banking majors – MCB Group and State Bank of Mauritius (SBM), as well as hospitality majors New Mauritius Hotels (which owns the Beachcomber brand in Mauritius) and Sun Resorts.
Foreigners were net buyers to the tune of Rs 333.6 million, higher than last year’s net purchases of Rs 252.1 million with sustained interest in MCB Group translating into net foreign purchases to the tune of Rs 350.7 million.
Incidentally, SEM started the second quarter on a weak note and nosedived from the start of March till mid-May, whereby its main index, the Semdex, even hit a low of 2,031.4 points – fuelled to a considerable extent by a temporary downturn in the MCB Group, but picked up thereafter amidst the pouring in of quarterly results and dividend announcements.
Gaming major Lottotech’s initial public offering (IPO) was the highlight of the quarter, and its stock was oversubscribed by a whopping 3 times.
The development market index, the Demex, yet again outperformed the Semdex this quarter where the former gained 4.2%, mostly spurred by Alma’s surge and by Ciel Textile, which hit a record-high.
Meanwhile, the market profitability index, the Sem-7, lost 0.7% to end at 402.9 points.
It may be noted that the SEM-7 comprises the seven largest eligible shares of the Official Market, measured in terms of average market capitalization, liquidity and investibility criteria.
As for banks, despite the impairments registered during the current financial year, Anglo-Mauritius stockbrokers expects to see sustained interest given ongoing efforts are being deployed to participate in trade within the African continent.
Also, the market is expecting the insurance group MUA’s bond issue, in the light of its acquisition in an African insurance group.
Overall, in the third quarter of 2014 the market shall witness the release of financial results for the quarter ended June 2014 and for the entire financial year ended June 2014.
Banking groups, which were resilient, are expected to sustain investor’s interest. Besides hotel stocks are expected to perform well, given the positive trend noted in tourist arrivals over the past months.
Zooming in on the hospitality sector, data captured by the Bank of Mauritius shows that, comparing the 10 months from July to April from 2011-2012 to 2013-2014, tourist arrivals are growing but tourist spending is following a downward trend.
Several factors may have spurred this decline, with hotels opting for an all-inclusive package with lower room rates as well as tourists spending less after the crisis.
The hotel sector witnessed fierce competition due to which they had to lower rates and sometimes even move from the higher end segment to the lower end.
Another possible explanation for the decline in tourist earnings is the diversification away from traditional European markets towards new markets in Asia and Africa where tourists tend to spend less.
Besides, the report also forecast an increase in tourist arrivals for the second quarter of 2014, after a dip of 0.8% during the first quarter.
This forecast has been borne by the Statistics Mauritius report released yesterday, which showed tourist arrivals up 4% for the 6-month period to June 2014.
The main reason given by the Anglo-Mauritius stockbrokers report for this pick up was Easter falling in April, causing arrivals to grow by 16% in the month.
The report noted that the largest contribution towards rise in tourist arrivals were from the Chinese market which saw 90.1% increase in footfalls to the island economy since the beginning of the year.
The direct lines towards China seem to be reaping benefits for our tourism industry and the hotels are adapting their business model to suit this new market, concluded the report on tourist outlook.
Image (Mauritius news): On the official market, turnover amounted to Rs 5 billion, mainly geared towards the twin banking majors – MCB Group and State Bank of Mauritius (SBM), as well as hospitality majors New Mauritius Hotels (which owns the Beachcomber brand in Mauritius) and Sun Resorts.
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