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Results of the Malta Stock Exchange to 31 December 2007 |
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Written by Malta Stock Exchange
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Wednesday, 02 April 2008 03:28 |
Speech by Hon Tonio Fenech
Results of the Malta Stock Exchange to 31 December 2007
4 March 2008
It is my pleasure to announce another period of good performance for the Malta Stock Exchange. This is not just because of the positive results shown for the period where an increase in pre-tax profit of 15% is reported over 2006 to reach EUR1.3 million. More critically the importance of these results lies in the resurgence in listings in 2007, as well as the increased participation of active Maltese investors.
As Mr. Zammit Tabona presented, there were nine new bond issues, two new equity issues and thirty Government Stock and Treasury Bill issues. The total new primary listings raised EUR 808 million in 2007, and this excludes Government Treasury Bills.
The new issues included the first ever foreign company equity issue in Malta. Another foreign owned company has also listed in 2008 and still more interest is being shown by yet other organisations. We auger every success to these companies and their investors.
We have always recognised the Stock Exchange to be a strategic component of Malta's financial services industry. It enables investors to capitalise companies for growth in various industries. It provides an alternative investment channel for the Maltese. It also provides a more complete range of financial services for local and foreign companies in Malta, or companies wishing to tap our market and potential.
With this in mind, during 2007 we had embarked on a number of initiatives to achieve this type of growth in the financial services industry as well as all other industries.
In the first quarter of 2007 we changed our tax code in agreement with the European Commission, to make this competitive and attractive to both local and international business.
We then created FinanceMalta to act as both a marketing arm to the finance industry as well as our consultative channel with the industry through the Board, the Associations, and the expert groups within. FinanceMalta has worked well in 2007 and continues to do so through its 2008 programme and strategic agreements that support its marketing and public relations drive.
We have also changed the Financial Markets Act to enable the Malta Stock Exchange to restructure itself to take advantage of valuable opportunities that complement the financial industry in Malta. This has led to the creation of CSD (Malta) plc, a sister company to the stock exchange that will handle the certificate depositary business.
The Stock Exchange has also started to handle Treasury Bills issued by government and to have these cleared and settled on the same day. Treasury bills are an important instrument to the functioning of Government. Liquid and well run primary and secondary markets add value to these securities.
We have changed over to the EURO currency from the Maltese Lira. The EURO is an internationally traded currency, and one of the most important currencies together with the Dollar. This change has reduced foreign exchange risk to international investors wishing to invest in Malta, and vice versa. However, there is more significance to this change. It has enabled the Exchange to become a Direct Member of TARGET-2, the pan-European clearing and settlement system operated by the European Central Bank. This now places us within the European and International payment systems infrastructure making Malta so much more attractive as a place of doing international business.
But we have not stopped there. The Exchange is also becoming a member of the OTCQX, an international share trading platform operated over the Internet from the USA. The intention is to have Malta Stock Exchange listed organisations participate on the international market, seeking international investors through this platform. This is possible since the Malta Stock Exchange is considered to be a quality approved exchange by the OTCQX. This quality assurance is further enhanced with the Exchange's compliance with MiFID (Market in Financial Instruments Directive) and the Transparency Directive.
We have, only a couple of days ago, announced our entry to the final stages of a Double Taxation Agreement with the USA. This is critical to better business links with the world's largest market. This announcement by the US Treasury is a critical milestone in the process since it gives adequate notice to organisations in their business planning phase who may be considering new countries to invest in. Malta now falls within their investment radar. With the ratification of the DTA we will have created yet another reason to do business in Malta.
Although equity trading has reduced compared to 2006 levels, this was more than made up in trading in the newly listed Treasury Bills, Government Stocks and Corporate Bonds. This has brought total trading to EUR 457 million, that is an increase of 22% compared to 2006. By the end of December 2007 market capitalisation had reached EUR 7.7 billion, up from EUR 6.8 billion in 2006.
The indication of these trading results is that Maltese investors are becoming more sophisticated in their investment activity, especially as they are provided with more options locally and internationally. This is also a sure indication of the growing wealth in our country with more discretionary spending left in Maltese people's pockets to save and invest.
It is also this government's belief that the markets are a reflection of people's confidence in the political, social and financial aspects of the country. Ultimately, it is these investors who have placed their money where their opinions lay and I am happy to see their trust rewarded. I thank everybody who has participated in any way, no matter how small. I thank them for their trust in this government, in the knowledge of the stability and framework in place to have this financial and operational market grow in size and value.
It is the Malta Stock Exchange's intention to continue the success shown through further strategic initiatives in 2008 aimed at increasing the range of services on offer to issuers, investors and intermediaries.
The Exchange will continue to work on compliance with its international commitments and will offer access and interoperability to its core systems. It is also working on improving market liquidity, and attracting more companies to the market, especially the smaller family-owned companies as well as smaller overseas companies.
The Exchange is also deepening its international presence and roots. It is currently working on memoranda with the Shanghai Stock Exchange in China and the Cypriot Stock Exchange, pending clearance from the Malta Financial Services Authority, to introduce shipping related investment products of interest to Malta.
Truly, the Stock Exchange is and will continue to be the main trading venue for Malta into the foreseeable future. It is now left to me to congratulate the Chairman and Board, as well as the staff of the Malta Stock Exchange who have worked for this success.
Thank you
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