Mauritius Stocks Fall Most in Two Years After U.S. Credit Rating Downgrade

Mauritian stocks fell, sending the benchmark index down the most in more than two years, and the rupee weakened after a credit rating downgrade of the U.S. damped demand for assets in developing countries.

The 38-member SEMDEX Index of stocks declined for a second consecutive day, losing 2.8 percent to 1,942.66 at the 1:30 p.m. close in Port Louis, the capital, the biggest drop since July 2009. Mauritius Commercial Bank, the country’s largest lender by market value, dropped 3.4 percent. New Mauritius Hotels Ltd., the Indian Ocean Island nation’s largest leisure operator by turnover, lost 2.1 percent. The rupee sank 0.1 percent to 28.1550 against the dollar.

Mauritian stocks wiped out this year’s gains after the U.S. lost its AAA rating for the first time at Standard & Poor’s. Stocks fell from Shanghai to Moscow as investors retreated from riskier assets, sending the MSCI Emerging Markets Index 2.6 percent lower, capping the steepest five-day slump since November 2008.

“The U.S credit downgrade is likely to trigger a major shock to global risk appetite,” London-based Societe Generale SA’s analysts, led by Benoit Anne, said in an e-mailed research note today. “There is no indication that some emerging markets will weather the shock. This will probably include the more exotic frontier markets.”

Mauritius, with a population of 1.3 million, has reduced preliminary growth forecasts to 4 percent for 2012-2014, as its recovery path is dampened by lower investment and international financial climate, the Ministry of Finance said last week. The government had estimated growth 4.3 percent in 2012 and 4.5 percent in 2013, according to budget figures in November.

Mauritius is a net importer of food and fuels, with 67 percent of its import bills denominated in dollars. Europe is the country’s main trading partner for tourism and textiles, its two main sources of foreign currency revenue, according to the Central Statistics Office.

To contact the reporter on this story: Kamlesh Bhuckory in Port Louis via Johannesburg at 1933 or gbell16@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net

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