The highlight of the week was the announcements made by commerce conglomerate Rogers & Co. Ltd. (RCL) and industrial concern The Mauritius Chemical & Fertilizer Industry Ltd. (MCFI). RCL stated that it increased its stake in MCFI to the level of 20.8% (including both direct and indirect participation). This corporate transaction explained the high level of trading turnover noticed on MCFI on the 14th and 21st August 2003. Trades on MCFI accounted for 51% of the week?s total trading turnover. The core activity of MCFI is the production and blending of fertilizers targeting both the local and regional markets. In its 2002 annual report, 43% of its sales were driven by exports. Over the past two years, MCFI has gradually diversified its activities with the its investments in Bowman Cyber City Ltd., a call-centre operator, and construction concern Rehm Grinaker Construction Co. MCFI plans to transform itself into a major agricultural, trading and services organization in the region. Last week, RCL gained 1.1% to Rs 91.00 while MCFI eased by 8.3% to Rs11.00. RCL also hit the news with the opening of a second Jumbo Score hypermarket, which is a joint venture with Groupe Bourbon.

The local bourse weakened for the second consecutive week. Investors remained prudent and pursued with their profit-taking strategy. For the week ending Monday 25th August 2003, all three equity indices, the broad Semdex, the blue chip Sem-7 and the total return SEMTRI, declined by 0.3%.

Last week, the economic sectors posted mixed performance. The top performing sector of the week was the transport sector, which rose by 1.3%. Banks & Insurance sector noted a small gain (+0.2%). State Bank of Mauritius Limited edged 0.7% higher to Rs14.90. Hotels & leisure stocks remained under pressure. New Mauritius Hotels Limited slipped by 2.6% while Automatic Systems Ltd. eased by 2.0% to Rs 24.50.

?Eco Austral? Survey

Expectations of a worse-than-expected economic performance for this year undermined investors? confidence. The business community also seemed pessimistic about the economic outlook as per a survey published in the magazine Eco Austral. Investors avoided stocks and took shelter in safer instruments such as the treasury bills. Since the beginning of August 2003, investors bid up bond prices and pushed the bank rate to 8.45% p.a., down by nearly a quarter percentage point.

Last week, it was reported that the State Trading Corporation (STC) plans to review on a quarterly basis the pricing of petroleum products. In a recent report, the International Monetary Fund highlighted the potential short-term risks facing the highly indebted state-owned enterprises (such as the Central Electricity Board and STC). Going ahead, analysts considered that local equities may remain volatile amid deteriorating economic conditions and the threat of future hike in energy prices to corporate earnings.

Contribution by Confident Asset Management