Globalization has ushered in a process of integration of the world economic and financial systems. The growing interdependence of the global financial markets into a mega market place was evident during the Asian financial crisis of the later nineties and the simultaneous downturn in stock markets across the world over the past three years. Even though remote small island states like Mauritius and Seychelles were not connected with the origins of such crises, the effects crossed their borders uninvited. Whether we like it or not, financial globalization is a phenomenon which is rapidly changing the world economic landscape.
On the economic front, Mauritius has made a significant effort in its endeavor to become part of the global financial market. The island has been transformed from a low-income agriculture-based economy to a middle-income diversified economy with growth in tourism, industrial, and financial services sectors.
In comparison with other small islands in the Indian Ocean region, Mauritius is a leader in financial services, with a notable offshore banking sector. The offshore banks in Mauritius offer a wide range of services including foreign exchange dealing, lending, deposit taking, trade finance, offshore trust and securities and fund management.
The Mauritius Stock Exchange (SEM) was established in 1989 under the Stock Exchange Act of 1988. The exchange is regulated by the Financial Services Commission. A new Securities Act was passed in 2005 but has yet to be become effective. the exchange was recently promoted from the status of 'corresponding exchange "to that of Affiliated Securities Market within the Federation Internationale des Bourses de Valeurs (FIBV).Some 42 companies, with a market capitalization of US Dollar (USD) 3.7 billion are listed on the SEM and 52 companies, with a market capitalization of USD 1.5 billion are listed on the Development and Enterprise Market (DEM).The latter was established in August 2006 to replace the over the counter market. Twelve active brokerage companies operate in the market.
The trading of treasury bills on the SEM market was introduced in December 2003, a first step in a process aimed at setting up an active secondary market for government instruments. The market was opened to foreign investors after the lifting of exchange controls in 1994.
Fixed Income Market
A Primary Dealer System was established in March 2002.There are six primary dealers; five banks and one broker. Foreigners can participate in the market through approved primary dealers or brokers. Government securities mainly comprise treasury bills, treasury notes, government bonds and development loans stocks.
Treasury bills are issued in maturities of 91(Mauritius Rupee MUR 15 billion in 2006), 182(MUR 18 billion) and 364 days (MUR 19 billion). Treasury notes have tenors of 2 (MUR 3.3 billion in 2006), 3 (MUR 2.7 billion) and 4 years (MUR 3.2 billion).Government bonds are issued with a 5 year maturity.MUR 3 billion worth were issued in 2006.Development loan stock is issued with longer maturities (up to 15 years).MUR 3.3 billion worth were issued in 2006.
Securities of the Government of Mauritius are currently available to the public either through direct bidding on the primary market or by direct purchase. Direct purchases are made through any of the six primary dealers operating under the Primary dealer system for Mauritius, implemented in February 2002. Primary dealers are committed to provide continuous two ways pricing for these securities.
Last Updated on: 20-04-2010