The Malta Stock Exchange has launched a 19-point plan for capital markets, which chairman Joe Portelli said could be a “milestone – or just another day” depending on whether they were actually put into force or not.
The strategic plan proposes three main changes which would enable the Exchange to grow substantially through international business – at the same time bringing billions of euro into the economy which would benefit service providers.
Mr Portelli identified exchange-traded funds (ETF), real estate investment funds (REIT) and Islamic finance as posing the most potential.
“Ireland’s and Luxembourg’s stock exchanges have 80,000 listings between them. We have 260,” he told the audience of Malta’s top stockbrokers, bankers and consultancy firms, along with Prime Minister Joseph Muscat and Finance Minister Edward Scicluna.
“Their GDP per capita is $55,500 and $99,000 respectively, while Malta’s is only $35,900, which is not a coincidence.”
“Our fund industry and the insurance sector have been trying to chip away at Ireland and Luxembourg’s dominance but the listing rules do not allow us to list ETFs, even though that is a $3 trillion sector. We cater for UCITS but not REITs, even though Ireland and Luxembourg list thousands of them. We have been talking about securitisation but we do not list a single one. And we are attracting investment from North Africa and the Gulf and do not have a single Islamic finance product on offer – even though it will become a $3.4 trillion market by 2018.”
Dr Muscat was upbeat about the plan, saying that capital markets could be “the next big thing for Malta”, and within the foreseeable future.
“If we play our cards right, these new funds could become as familiar as UCITS,” he said.
The plan includes other initiatives which are specific to the operation of the Exchange itself, including the possibility of extending trading hours from just the morning to 3pm or 4pm, and issuing prospectuses to be in foreign languages when appropriate.
It also puts considerable emphasis on investor education, with the Exchange’s institute already offering numerous courses in both Maltese and English.
The plan also proposes changes to benefit investors, such as encouraging companies with equity listing to pay dividends in shares. The Exchange is also using a new ‘total return’ index to enable investors to compare performances more easily.
The plan is open for consultation until mid-December with the Exchange board then planning to absorb the feedback for a further month. The intention is for the plan to be executed by the end of 2018.
An exchange-traded instrument could be an exchange-traded fund or an exchange-traded note, generally an investment fund or not which trades on an exchange.
Real estate investment trusts generally trade on an exchange and own or finance income-producing real estate. Modelled after funds, they offer investors regular income streams, diversification and long-term capital appreciation.