Banking stocks lift Mauritian bourse up after extended downturn following Ponzi scheme
The Mauritian bourse ended in positive territory last week following an upturn in the performance of banking majors, with SBMH inching up by 6.8% upon a boost in investor confidence levels; however, there is still a lot of trepidation in the financial sector in the wake of the Ponzi scheme in excess of Rs 25 billion that erupted at the start of April. (Image: Composite)
The Stock Exchange of Mauritius (SEM) rebounded from lower levels with both the broad equity index, the Semdex, and the bluechip index, the SEM-10, inching up by 1.3% and 1.6% each for the week ended 30 April 2015 to close at 1955.8 and 371.0 points respectively.
The upward performance of the market was reflected in the gains of the two banking majors — MCB Group Ltd stock went up by 1.6% and SBM Holdings Ltd increased by 6.8%.
Investors regained confidence in the shares of SBMH, after the bank released a communiqué on an alleged customer debt write-off expressly stating that, “the said article, alleging that advances granted to Mr. Rakesh Gooljaury and/or his companies have been written off by the bank….is false, misleading and totally unfounded.” Following this clarification, the share price of SBMH inched up to Rs 0.94 from a record low of Rs 0.88 the prior week.
The official market turnover at the close of the week at Rs 46.9 million, where the market capitalisation stood at Rs 217.4 billion and volume traded was 31.6 million.
The positive performance of the SEM-10 can be attributed to the significant increase in the SBMH share price by 6.8%, together with the rise in share prices of the MCB Group Ltd, while other constituents of the index reported a mixed performance with CIEL Limited and Ireland Blyth Limited posting a flat performance.
Declining performers amidst the SEM-10 stocks were Alteo Ltd, Terra Mauricia, Rogers & Co. Ltd and ENL Commercial Ltd which dipped by 0.3%, 0.2%, 0.3% and 1.0% each respectively.
On the hospitality front, bluechip stocks such as New Mauritius Hotels Ltd and Lux Island Resorts Ltd remained constant at Rs 61.00 and Rs 58.50 respectively.
The top three performers of the week were Policy Ltd, which appreciated by 7.4%, followed by SBMH, which rose by 6.8%, and finally, Swan General Ltd, a rebranded entity from Swan Insurance Co Ltd, whose share price pushed up by 6.8%, to close at Rs 345.00.
The main market losers were Go Life International, which dropped off by 20.0%, followed by Cim Financial Services Ltd and ENL Land Ltd, which decreased by 1.1% and 1.0% respectively.
On the Development and Enterprise Market, the DEMEX fell by 0.4% as market major Medine Ltd dipped by 0.4%.
In conclusion, given the current state of turmoil in the local stock market, it is a good time to remember one of Warren Buffet’s classic investment rules: “Be fearful when others are greedy, and be greedy when others are fearful.”With a majority of investors treading with caution in financial markets currently, it may be time for smart investors to heed Buffet’s advice and show some well-timed‘greed’.