L’ANALYSE FINANCIÈRE DE NOTRE EXPERT
January 2021 was the continuity of the trends of the last three years: on one hand, the Mauritius Stock Exchange has lost its attractiveness, as governance issues seem to paralyse private sector initiatives, while on the other hand the US and Asian markets are experiencing record inflows following the strong results published by the largest market capitalisations.
International markets are also supported by the material drop in the weekly numbers of Covid-related deaths in several countries like India, UK, Italy and South Africa. Unfortunately, the lack of reopening plan in Mauritius does not bode well for the local economy, which already lost Rs.70 billion of GDP in 2020.
The IGF performance for the seven months since 30th June 2020 now stands at -1% and we will fight in the coming months to generate a positive return during the current financial year, despite the deteriorating macro-economic environment in Mauritius. Following the results published by NMH and Sun, we can anticipate a depressed market price for the MCB Group, our largest individual holding, for a number of months.
For both Mauritius and the international markets, the most important statistic to watch carefully going forward will be inflation. Should inflation knock on the door, long-term interest rates will increase and that would be bad news for equity and bond markets altogether.