July 29 (Bloomberg) -- Mauritian stocks had the biggest monthly drop in more than a year as concern that the U.S. and Europe will struggle to contain their debt crises curbed demand for frontier-market assets and as ministers in the Indian Ocean island country resigned this week.
The 38-member SEMDEX index increased 0.2 percent to 2,026.95 by the 1:30 p.m., close in Port Louis, the capital, paring its decrease in July to 3.1 percent, the biggest monthly drop since May 2010.
U.S. lawmakers scrapped a vote on the debt-ceiling bill yesterday, with the delay fuelling concern that a compromise won’t be reached before the Aug. 2 deadline for a possible U.S. default. Moody’s Investors Service said it may downgrade Spain as last week’s Greek bailout raises the risk that bondholders will have to pay for further European rescues. Mauritius’s Finance Minister Pravind Jugnauth said he and four other ministers from his party resigned in solidarity with Santi Bai Hanoomanjee, the health minister who was charged with graft.
“The trend can be attributed to sovereign debt in Europe and the risks of a U.S. debt default and downgrade,” Imrith Ramtohul, a senior investment manager at Mauritius Union Group who helps oversee 7 billion rupees ($253 million) in assets, said by e-mail.
Mauritius Commercial Bank, the country’s largest lender by market value with a 24 percent weighting in the index, led decreases, retreating 5.9 percent to 177 rupees in the period, its biggest monthly drop since February 2009.
New Mauritius Hotels Ltd., the island’s biggest leisure operator by market value, slipped 4.4 percent while Sun Resorts Ltd., the second-largest, slumped 8.7 percent.
“Hotels are moreover likely to be impacted by a weaker euro and a slowdown in Europe,” Ramtohul said.
Europe accounted for 64 percent of tourist arrivals in the second quarter, according to the Mauritius Tourism Promotion Authority’s website. Tourism, with textiles, is the country’s biggest earner of foreign currency. The rupee appreciated 3.9 percent to 39.96 per euro over the month, heading for the biggest monthly gain since January 2010.
Mauritian President Anerood Jugnauth assigned the Finance and Economic Development Ministry to Education Minister Vasant Kumar Bunwaree on July 27. Bunwaree served as finance minister from 1996 to 2000.
“Vasant Bunwaree is a safe pair of hands,” Bank of Mauritius Governor Rundheersing Bheenick said in a transcript of an interview published by Port Louis-based l’Express today.
--Editors: Ana Monteiro, John Kohut
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