The Mauritian economy operated only 85% of its capacity in the second quarter of 2021. This was pointed out by the AXYS company in a publication from March, a direct consequence of the pandemic. However, according to Bhavik Desai, Head of Research at AXYS, there are opportunities for investment. “Although the country is going through a difficult economic moment – and potentially being close to its lowest point during this crisis – this situation offers interesting investment opportunities in the medium term,” explains Bhavik Desai.
AXYS explains that the partial closures in the hotel industry and the lack of business travels led to the slowdown of global business and internationally focused real estate sectors.
Be on the safe side
“Mauritians have been cautious about spending and investment. This cautious attitude, coupled with lower interest rates on fixed deposits and savings, has contributed to a renewed interest in subdivisions. This is against the backdrop of a poor performance of the Mauritian stock market,” says the Head of Research at AXYS.
Anticipating better days with the forthcoming reopening of our borders and the prospect of travel without the need for quarantine in October, he added that since March there has been renewed interest from investors in the Mauritian market.
“Announced in the 2021-2022 budget, a higher remuneration for bagasse has given a new boost to the sugar industry which in turn has propelled the market to its highest level since February 2020. In short, investing in the markets is always about timing. Despite this recent dynamism, the valuation of stock market assets has so far remained below their pre-pandemic levels. This is an attractive entry point for an investor looking for a decent return on investment over the medium term.”
The global economic outlook
According to Bhavik Desai, the increase in inflation expected in 2021/2022 makes it more attractive for major businesses to invest now. “In recent weeks, we have also seen a rise in the interest rate at which the government borrows from taxpayers. This makes investment in fixed income securities more attractive ,” concludes AXYS’ Director of R&D.
What do experts in other countries recommend? Before answering this question, it is worth looking at the latest World Bank (WB) report on the global economic outlook. “The world economy is expected to grow by 5.6% in 2021, showing a post-recession rebound of a magnitude not seen in 80 years. This recovery is uneven and largely driven by the strong recovery of a few large economies,” the World Bank said in its latest Global Economic Prospects report released on 8 June.
Recovery and new opportunities
It warns that in many emerging and developing economies, barriers to vaccination against COVID-19 are constraining economic activity. According to the World Bank, there are considerable downside risks to the global economic perspectives, including the possibility of new outbreaks of disease and the threat of financial stress amid high debt levels in emerging and developing economies. The World Bank advocates that policymakers should focus on stimulating the recovery while preserving price stability and fiscal sustainability, and continue to push for reforms that support growth.
With the “post-recession rebound of unprecedented importance in 80 years” predicted by the World Bank, we can be optimistic about the years ahead. However, for some African countries, as Andrew Alli – former CEO of Africa Finance Corporation and current Managing Director of SouthBridge Group – has pointed out, the recovery brings with it new investment opportunities. These opportunities, especially in Africa, differ from country to country. Andrew Alli explains that if his investment was only intended to have an effect on development, he would spend it on educating people. “The money would be well invested if it gave people the skills they need to seize new opportunities”, when asked what he would do with a billion dollars, he added that if he were investing strictly for profit, he would look at the digital technology sector, bio-technology or even other emerging skills related to the digital economy, such as product design.
Invest in a country with lots of assets
The total private wealth held on the African continent by millionaires is $2 trillion according to the AfrAsia Bank Africa Wealth Report 2021. The main assets for generating millionaires include security, freedom of the press, strong property rights, strong economic growth, a well-developed banking system and stock market, low levels of government intervention, low income and corporate tax rates, ease of investment and wealth migration.
It is clear that Mauritius is one of the few countries to have all these advantages. This is an invitation for more foreign investors to settle here and to encourage Mauritians to invest more. Since Covid-19 has been raging around the world, the concern is about the stock market and investment.
Every day that you invest your money, you have a better chance to make money on your investments. And according to the website millionaires, the right time to invest in real estate is “now”.