Is there a Bubble on the Stock Market in Mauritius?

The recent performance of stocks traded in the Stock Exchange of Mauritius has been remarkable. The SEMDEX, the official index representing all the 40 or so stocks has grown by 130% in the last two years (Figure 1). From January to November this year, the SEMDEX went up by 40% in US dollar terms. If history can serve as a guide, it is to be noted that a similar trend was observed between 1990 to 1994, when the stock market crashed, and took nearly 8 years to recover (Figure 2). The obvious question therefore is: is there a bubble in the stock market in Mauritius and if so, will it burst and when? In my view, things are different this time. I can find two interrelated reasons for this:

Two Africas

The Time Magazine has an interesting article about the fate of two Sub-Saharan countries: Angola and Mauritius. Angola has oil and grew at 35% last year, after years of stagnation. Mauritius has no oil and has been among the top 10 fastest growing economies in the world for the last three decades. Why Mauritius grew and Angola did not is exemplified by the lives of two entrepreneurs, Mr Francois Woo, a Mauritian and Mr Adérito Cassolongo, an Angolan. Here are excerpts: