The Malta Stock Exchange Total Return Index – Msetrx, a methodology that calculates the value of investment in equities through an index, has been inaugurated by Finance Minister Edward Scicluna.

Prof. Scicluna said Msetrx is going to bring the Malta Stock Exchange in line with international stock exchange standards, reflecting the total return generated by equity investments.

The Msetrx will be replacing the current MSE Equity Index which was used up till now.  

The new Total Return Index (TRX) will take into consideration both the price fluctuations of the component shares as well as the dividends the companies pay.

The Msetrx is based on the assumption that all dividends are reinvested back into the index giving a better representation of the potential economic benefit of equity investments and the benefits of compounding. The indexes return from January 1, 1996 to December 31, 2016 would have been 10.91% annually, with a cumulative gain of 780%.

Malta Stock Exchange chairman Joseph Portelli said that the tenants of sound financial planning suggested that the hefty dividends paid by many of the companies listed on the MSE, where possible, could be reinvested into buying more shares.

He said the exchange intends to introduce a dividend reinvestment program facilitating the reinvestment of dividends with lower costs.  He also said that the index’s stellar returns reflected very well on the excellent growth of the Maltese economy and performance of many of the companies listed on the exchange.

In a first for the MSE, the exchange presented a special dividend of €2 million to the government, a sign of its success.