THE FINANCIAL ANALYSIS OF OUR EXPERT
The Net Asset Value of IPRO Growth Fund Ltd. (“IGF”) fell by 1.6% in December. Both the local portfolio and the foreign portfolio retreated during the period, with the latter contributing to the bulk of the losses.
On the domestic front, December saw the Bank of Mauritius increase the key repo rate by 50 bps to 4.50% in an attempt to fight inflation and also to manage interest rate differentials with the rest of the world. This was the 5th interest rate hike by the local Central Bank this year, with the total cumulative increase for 2022 standing at 2.65%. The local equities market remained mostly flat during the month with the SEMTRI returning 0.4%. Amongst our main holdings, MCBG, UBP and Miwa Sugar did however experience share price dips, which dragged the performance of the local portfolio during the month. With regards to portfolio changes, we re-initiated a position in MUA in December, taking advantage of the current price weakness in the insurer’s stock. On the whole, the SEMTRI remained resilient throughout 2022 despite difficult macroeconomic conditions. The index delivered a positive return of 1.0% over the year.
Internationally, the MSCI All Country World Index lost 3.9% in December and closed 2022 with a calendar year loss of 18.4%. Emerging markets once again outperformed Developed Markets, boosted by the rebound in Chinese equities as the country took further steps towards reopening. Both our foreign holdings posted losses during the month, though they fared better in comparison to the broad global equities market.
The themes that have characterized 2022, namely inflation, interest rate hikes, the war in Ukraine and recession fears will likely persist into 2023, and consequently, the investment landscape is expected to remain challenging in the coming quarters. Whilst unnerving, market volatility can provide advantageous entry points to long-term IGF investors.