Mauritius is the only Indian Ocean Island which has a stock exchange and it has been a very attractive investments destination for foreign investors as well as local investors. The Stock Exchange of Mauritius was established on the 30th March 1989 under the Stock Exchange Act 1988 as a private limited company whose responsibility was to operate and promote an efficient and correct securities market in Mauritius. Since 2008, it was changed to a public company which has lead to significant improvement in its operations as a stock market worldwide. SEM is now considered to be one of the seven leading Exchange in Africa which trade automatically and which has been very beneficial to the country as well as to Mauritius, in terms of volume transactions, market capitalization and fairness.
The Stock Exchange of Mauritius is normally administered by the Financial Services Commission (FSC) which establishes legal framework for efficient and effective operations of the stock market. SEM is now a member of the Committee of SADC Stock Exchange (COSSE), the Southern Asian Federation of Exchange (SAFE) and the World Federation of Exchange (WFE). It is also termed as a "Recognized Stock Exchange" by the United Kingdom's Her Majesty Revenue And Customs". SEM has also worked with the Central Bank and Commercial Banks in order to trade medium and long-term government securities with the objective to attract more foreign investors' interest on the stock market.
Many companies listed on the SEM have gained by moving from private companies to public companies. They have also benefited from the availability of multi-currency trading and competition which has lead to an increase in their market value and very attractive returns. SEM has also provided its investors with additional comforts which have encouraged them to participate freely on the stock exchanges. The main participants of the Stock Exchange of Mauritius are the investment dealers which include the Bramer Security Ltd, SBM Security Ltd, Anglo Mauritius Stoke Brokers Ltd, etc and the Custodian Banks which consist of the State Bank of Mauritius, Mauritius Commercial Bank, etc.
SEM currently operates two markets: the Official Market, which was created for larger companies and the Development & Enterprise Market. Both are classified into seven broad categories namely, Bank and insurance, industry, investment sector, sugar, commerce, leisure and hotels and transport. The banking and insurance sector are the most prominent sector listed on SEM with the greatest market capitalization.
The main market indices of the Stock Exchange of Mauritius on the Official list are the:
SEMDEX, which is an index of the market used to measure the performance of the stock market and is obtained by the following formula:
SEMDEX= Current market value of all listed shares * 100
Base market value of all listed shares
SEMTRI, whose main aim is to provide both domestic and foreign investors the basic tool for better performance of the overall stock market.
SEM-7, which is also used to measure the stock market performance and it consists of the seven largest Mauritian companies by market capitalization.
Stock market is seen to have a very significant element of the financial sector of any economy. Mauritius has well developed financial sectors and is considered to be one of the main pillars of the Mauritian economy. Over the past years both bank and insurance companies have been dominating the finance sectors. As this report will be analyzing the effect of interest rates on stock market of Mauritius- a sectoral approach from SEM and DEM (finance sector). The Main companies listed on the SEM Official list are the:
Mauritius Commercial Bank Ltd:
MCB was incorporated in 1838 with the largest market capitalization on the SEM. It is considered as the leader of the Mauritian Banking sector.
State Bank of Mauritius:
SBM is the second largest company listed on the Stock Exchange of Mauritius which offers a wide range of financial services.
Bramer Banking Corporation Ltd:
BBC is a subsidiary of the British American Investment and the Mauritius Leasing Company.
Mauritius Union Assurance Co. Ltd:
MUA is among the leaders of the insurance sector which allows secured loans for both domestic and foreign investors.
Swan Insurance Co. Ltd:
Mauritius Eagle Insurance Co. Ltd:
MEI was established as joint venture and has been the first organization in Mauritius and the Indian Ocean to be awarded for ISO 2700.
Development & Enterprise Market (DEM)
The Development & Enterprise Market was set up by the Stock Exchange of Mauritius in 2006 which replaced the Over-The-Counter (OTC) Market. It was created for Small and Medium Sized Enterprises (SMEs) and for newly-set up companies as well. DEM was normally created for companies who want to increase their capital for better growth in the future. Also, to improve liquidity and credibility of their shares and enhance cooperation amongst others by creating a well organized and regulated working environment. DEM currently consists of 43 companies which are classified into seven main categories as mentioned above. It is an exchange-regulated market that permits companies to the financial market.
The Development & Enterprise Market is also in accordance with Government's policy in order to promote the development of an energetic business environment in Mauritius and also allowing investors to have access to a wide variety of investment opportunities amongst each other. In order to be listed on the DEM, an investor should have a minimum market capitalization of MUR 20 millions and a minimum of 100 shareholders. [1]
DEM consists of two main indices compared to the Official Market which is comprised of three. They are the DEMEX and the DEMTRI. DEMEX is defined as the price index of the Development & Enterprise Market and is obtained in the same way as SEMDEX is calculated. But, the difference is that the selected base year for DEMEX is 2006 whereas for SEMDEX is 1989. On the other hand, DEMTRI is the total return index that listed companies the Development & Enterprise Market earn.
Companies listed on the Development & Enterprise Market benefit from lower costs and lower disclosure requirements compared to companies listed on the Official Market, which in turn encourage them to give better performance.
