Q: Could you give us some background information on the Mauritius Stock Exchange?

A: The Mauritius stock market is relatively young as the stock exchange was created 18 years ago. At the time, the country was going through a phase of major transformation and growth, so it was very important to create the financial institutions that accompany the transformation. The original purpose of the exchange was to modernize our financial sector and to create a platform for financing the growth of the local companies.

Of course, it took time for the exchange to take off and develop. In 1989 we started with five listed companies and market capitalization of 1 billion Mauritian rupees. Now we have 92 companies with total market capitalization of about 181 billion rupees, trading on two markets - the main board and the Development and Enterprise Segment.

More importantly, over the years the Mauritius Stock Exchange has grown to become one of the most important markets in Africa in several ways. First, we are among the leading exchanges in terms of infrastructure. We have a fully automated stock market infrastructure from trading to settlement that is very similar to the infrastructure of the big markets with a long history. We operate in line with international standards and we are the second exchange in Africa to become a full fledged member of the Worlds Federation of Exchanges.

Trading volumes are increasing and, more importantly, the performance in dollar terms of the different listed companies has been excellent. Over the last 5 years the market index has increased by more than 300%, essentially underpinned by the strong performance of major stocks. Also, the market has been growing rapidly both in terms of domestic and foreign investors. Foreign investors are playing an important role in the daily trading activities as they account for about 35% to 40% of the trading.

Another important feature of our market is that corporate and individual taxes have been cut in half over the last two years, down from 30% to 15%. The dividends on listed companies and capital gains are tax free in Mauritius, so that’s a very important incentive for investors in addition to the strong performance.

Going forward, with the economy growing at about 6% annually, and with the government focusing on macro-economic policies. I believe that Mauritius is well positioned to become an important and attractive investment destination.

Q: Could you provide an overview of the nature of the Mauritian economy so that we can understand the stock exchange within its context?

A: For a very long period of its history until the beginning of the 1970s, Mauritius was essentially a mono-crop country, relying mostly on sugar cane production. But, in order to reduce our exposure to the vagaries of a mono-crop economy, the authorities undertook to diversify our economic base in the 1970’s and 1980’s.

Tourism was a natural industry because Mauritius is an island and its beautiful beaches and lagoons are a key asset. In addition, the government invested in the development of the textile industry through a series of incentives, and both industries took off after some time.

Sugar today represents about 5% of the GDP only. Tourism, textile and financial services constitute an important part of our GDP from a sectoral standpoint. The Stock Exchange has benefited a lot from the pursuit of this diversification of our economic structure and today lists companies from the different sectors of the economy, namely sugar, tourism, textile, financial services, etc.

Q: Does the connection with India and China help on the side of financial services and business process outsourcing?

A: Mauritius enjoys a very strong relationship with both India and China. This relationship has been reinforced through the signature of competitive double-taxation treaties with both India and China. Mauritius is ideally positioned to become the link between India-China and Africa and Europe. Our excellent relationship with these two Asian Powerhouses, coupled with the openness of our economic policies and a financially and technically bi-lingual literate population, put us in a favourable situation in business-process outsourcing and financial services.

Q: Would you explain in more detail how has the exchange evolved in the last 15 years?

A: The Stock Exchange of Mauritius has evolved as a reference Exchange during the last fifteen years on the African continent. All this has been achieved on the back of fundamental changes brought to the operational and regulatory infrastructure of the Stock Exchange. The SEM possesses a world-class stock market infrastructure which reflects standards and functionalities observable in stock markets with a much longer history of stock market activities. Our regulatory environment has also been revamped substantially to match international standards.

On the performance front, the annualized total return over an 18-year period has been 22%, indicating that investors have been handsomely rewarded. Total market capitalization today represents about 85% of GDP of our country indicating the growing weight of our stock market in our economy. Foreign investors’ activities on our market have been growing over the years and today represent about 35% of activities. Liquidity too has improved substantially over the years.

Q: What is your policy to motivate both companies and investors to be part of the exchange?

A: As far as investors are concerned, we have a website which possesses a wealth of information and which contains a section about investor education. We also conduct investor education campaigns through different channels which aim at bringing stock market investments to the understanding of the population at large.

With regard to companies, we have been very active reaching out to companies explaining to them how to list on the Exchange, what are the advantages as well as the responsibilities of being a listed company, and how to undertake capital-raising activities on the Exchange.

Q: What''s the profile of the investors on the exchange?

A: Local investors account for about 65% of the trading activities, and 75% of that local volume is generated by institutions like mutual funds, pension funds and insurance companies. But retail investors are growingly turning to the stock market because dividends and capital gains are not taxed and because the returns on the stock market have been attractive.