Last week, the Mauritian bourse experienced another period of weakness amid soft economic data and profit-taking. For the week ended Monday 14th July 2003, the broad market index, the Semdex, slipped by 0.4% while the blue chip Sem-7 index dropped by 0.5%. The total return index SEMTRI eased by 0.3%, but remained in positive territory (+24.5%) for the year 2003. Trading activity on the official market was dominated by the on-going share buy back schemes of The Mauritius Commercial Bank Limited (MCB) and State Bank of Mauritius Ltd. (SBM). Trades on both banks amounted to 90% of the total weekly turnover.

Sugar stocks led the decliners with its 2.1% drop amid a newspaper report indicating lower sugar extraction rate (8.7% versus an initial estimate of 9%) and a shortfall in sugar production (estimated at 570,000 tonnes) for the current year. Analysts may cut the estimated sugar production level, should unfavourable climatic conditions (sudden drops in temperature) persist. Shares of sugar concerns Mon Trésor Mon Désert Ltd. and The Savannah Sugar Estates Company Ltd. slipped by 2.3% (to Rs 43.00) and 6.7% (to Rs 70.00) respectively. Other sugar stocks remained unchanged. At its analysts? meeting held last Wednesday, sugar conglomerate Harel Frères Limited (HFL) commented its financial results. For the year ended 31st December 2003, HFL saw a 3.6% rise in its turnover, but recognized a 73.2% drop in its net profits. This shortfall was mostly attributed to losses linked to its associated companies (Rs25.7m), operations in Ivory Coast (Rs33m), construction concern Rehm Grinaker Construction Co. Ltd.

(Rs 10.4m) and Mauritian sugar milling activities (Rs16.3m). Going ahead, the management made mention of efforts in gearing up HFL?s efficiency and competitiveness to face the challenges of trade liberalization. HFL is reviewing its milling operations at Belle Vue Factory, in view of increasing its profitability. As regards to the current financial year, the management expects HFL to post a level of performance similar to that recorded in year 2001. Over the next 3years, analysts expect HFL to gradually reduce its financial obligations (long term debts amount to Rs2.3bn) through sale of lands as well as from cash flow generated from its power generation activity. Last week, HFL remained stable at Rs 41.00.

Hotel stocks remained firm despite news of a drop of 11.5% in hotels occupancy rates for the month of June 2003. The after-effects of the Iraq war, SARS virus outbreak and global economic weakness were regarded as the main factors behind the weaker-than-expected figures for the year 2003. Shares of New Mauritius Hotels Limited gained 0.8% to Rs38.30, while Sun Resorts Limited remained stable at Rs43.60. Shares of Air Mauritius Limited rebounded 4.7% to Rs15.70 during the week under review.

Another piece of news was the bonus issue announcement by building material conglomerate United Basalt Products Limited (UBP). Further to the approval of its shareholders at a special meeting to be held on 23rd July 2003, UBP will issue bonus shares in the proportion of one new ordinary share for every four ordinary shares held (1:4).UBP closed the week up by 1.8% to Rs 44.30.

Contribution by Confident Asset Management