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African Capital Markets: Challenges and Opportunities

MAURITIUS

AUTHORS

Bhavik Desai
Head of Research, AXYS Stockbroking Ltd

As a former sugarcane monocrop economy, Mauritius has developed significant financial services, real estate, and tourism sectors. 
From the 300 sugar mills operating in the mid-19th century, just three remain. But some of the companies that operated the mills still survive, having spun off their operations into multi-sector conglomerates, banks, and insurance companies. 
The largest of these conglomerates are listed on the Stock Exchange of Mauritius (SEM). Growth of the exchange has been facilitated by the creation of multi-currency listings, trading, and settlement in 2012.
As a result of an expansion of the multi-currency platform and an internationalisation drive to position Mauritius as an international financial centre, foreign listings are growing. The majority of these are REIT-type companies, which now represent 16% of the local market. 
In debt markets, an uptick in the secondary market for sovereign bonds can be ascribed to changes in the primary dealer system in 2017. Primary dealers must now offer 60% of their domestic sovereign debt holdings for sale, act as market makers, and flag all trades on Bloomberg’s E-Bonds system. 
Corporate debt issuance does not match demand, with the result that corporations tend to issue bonds as a cheaper alternative to bank loans. 
The future development of Mauritian capital markets depends on the ability to lend securities, to short sell, and to use derivatives; reduced settlement times and local investors diversifying wealth from bank deposits and real estate to stocks and bonds. 

MAURITIUS

Do you know....?

 

Question: The flightless dodo bird (found only in Mauritius) became extinct shortly after Dutch settlement in the 1600s. Foreign exchange control became “extinct” (that is, suspended) in what year?

YOU'RE RIGHT!

Answer: 1994. Although the Stock Exchange of Mauritius (SEM) was established in 1989, it is still going strong, as is daily trading on the SEM (which began in 1997).

VERY CLOSE!

Answer: 1994. Although the Stock Exchange of Mauritius (SEM) was established in 1989, it is still going strong, as is daily trading on the SEM (which began in 1997).