MSE’s strategy and the outlook for the Maltese capital markets
By: Ganado Advocates
In the second episode of the ‘Ganado Meets Finance’ podcast, Nicholas Curmi, partner and head of the capital markets practice at Ganado Advocates, meets the Malta Stock Exchange’s Executive Chairman Joseph Portelli for a frank chat on the inner workings of the Malta Stock Exchange, and the way forward for the Maltese capital markets space.
Listen to the podcast here:
Joseph Portelli looks back fondly on his time as Executive Chairman of the Malta Stock Exchange (MSE), and quips that there’s much more to come from him, and his team at the MSE, in the years to come. Portelli harks back to some of his earliest initiatives in the role, and highlights the MSE’s launch of a national, capital markets strategic plan pinpointing twenty-two (22) different focus areas for the MSE’s future growth, as falling squarely within his ‘MII strategy’ – i.e. of modernising, institutionalising and internationalising the MSE. Portelli concedes that the MSE’s previous strategy predominantly revolved around servicing the local economy, but the shift in mindset brought about by this new strategy unlocked a new-found focus to attract international players to Malta. Indeed, the MSE sought to create new and exciting products, including its exchange traded fund (ETF), its real estate investment trust (REITs) framework, its Institutional Financial Securities Market (IFSM), Prospects MTF, as well as a novel green bond market. Portelli also notes that the MSE had invested heavily in updating its infrastructure and premises over the past couple of years, and proudly remarks that the MSE would be hosting the World Federation of Exchanges’ annual general meeting this coming September; with approximately 400 executives from exchanges the world over expected to come to our shores for this event.
What more can be done?
Portelli concedes that despite its best efforts, the MSE had failed to attract the level of international listings it had originally set out to achieve. He blames this partly on the likes of Ireland and Luxembourg having stolen a march on the Maltese jurisdiction; with around 75,000 Eurobonds having found a home on Irish and Luxembourgish exchanges. Portelli further notes that Luxembourg in particular had become a powerhouse for green bond listings, and that while the MSE harboured hopes to emulate its Luxembourg counterparts, this was rather difficult to achieve.
Portelli focuses on what Malta has to offer when compared to its European counterparts, including cost-advantages, and notes that Malta would do well to focus on small and medium size enterprises (SMEs) looking for a listing on a European market, stressing the importance of increasing awareness through participating at and sponsoring international conferences. He laments the onset of COVID-19 as having significantly stultified progress in this area, but looks with optimism to the future, and remarks that positive meetings had been held with the Minister of Finance on the importance of growing the MSE’s international outreach.
Curmi also takes the opportunity to laud the launch of the MSE’s educational arm (the Malta Stock Exchange Institute), and both he and Portelli emphasise the importance of education, particularly of the local investor-base, in further developing the Maltese capital markets.
Future-proofing the MSE
Portelli refers to further diversification and the identification of additional sources of revenue as key for the MSE’s future growth and stability. He notes that the Maltese capital markets have effectively filled the void for companies which are not able to obtain bank financing, and cites the entities listed on Prospects MTF as prime examples of this reality. Portelli further highlights the fact that local companies are becoming increasingly appreciative of the prestige of listing their securities on the exchange, and the opportunities which this presents in terms of succession planning (for instance).
Portelli closes off by congratulating the law firms and the brokerage firms, among others, for their stellar work in pushing the Maltese capital markets to even greater heights, and notes that the MSE is intent on fostering and strengthening this momentum going into the future.