“We crossed over $1b in market capitalization this year”

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Launched in January 2008, the Maldives Stock Exchange opened its door with just four listed companies amounting to a market capitalization of $187 million. At the top of 2018, coinciding with the bourse’s 10-year anniversary, the exchange tipped over the 16 billion-rufiyaa mark, or $1 billion, signaling an historic moment for the young and growing capital market. Aushan Latheef, CEO of the MSE, explains how telecom operator listings and the introduction of a web-based subscription platform have supported the bourse to reach new heights.

What led the MSE to reach a new record in market capitalization this year?
In 2017, which was the most remarkable year for the stock exchange, we utilized tech-based solutions: Infinity, a web-based subscription platform connected investors across this dispersed island nation to capital market activities for the first time. We have had three new offerings, including Ooredoo, HDFC, and the first right’s issue of the Maldives from MTCC, which together totaled nine listed companies. With that, the MSE crossed over $1 billion in market capitalization this year. The major value addition to the stock exchange was the listing of the two telecom companies of the Maldives, Dhiraagu and Ooredoo. Both of the companies together hold 12.59 billion rufiyaa ($835 million) out of 16 billion rufiyaa ($1 billion) of total market capitalization. We are still looking at new, potential listings this year.

How has the rollout of the Infinity portal been received?
Infinity is a subscription web-based platform that was launched in April 2017. Today we have over 300,000 users with a 70:30 male-to-female ratio, and 52% of users classified as youth, aged from 18 to 35. We’re further looking into developing an app for Infinity, which means it’ll be more mobile-friendly. The main initiative was to connect the Maldivian people to capital market activities. As you know, the island nation is very dispersed, and there’s no easy physical way of applying for subscriptions. Earlier on, people had to come visit Male and do a very manual process for application, which was very tedious, time-consuming and costly. Through Infinity, everything becomes easier. There’s a KYC (Know Your Customer) process; people have to upload their documents, but ultimately, it’s very easy and saves a lot of time. It’s also accessible for international investors. Any foreign party can invest in our market by subscribing through Infinity.

And what is next for Infinity?
We’ll be looking at more options for payment settlements. Currently, we have credit card and online payments, but we want to include mobile wallets as well. Today, the trend is towards a more demat account format, which allows users to deposit in an electronic form. A young and energetic business technology team developed the whole Infinity platform in-house, and that will allow us to more easily upgrade and maintain the system. In the future, we’ll be looking into account transfers as well.

As the new CEO of the nation’s bourse, what is your outlook for the future of the capital market in the Maldives?
We’re a 100% Muslim nation, so there’s definitely potential for Islamic instruments. The first Islamic security that came into the market was in 2013 – a sukuk from HDFC that saw a 40% subscription rate. Last year, they came out with the second sukuk issuance, which had a 60% subscription rate. That’s progress. That’s four times more in value than what they raised in 2013. Considering that there were three listings last year, and all were able to subscribe almost 60% to 70% of each offering, that shows potential going forward.

What challenges do you see in developing the capital market?
A lot of reforms need to happen to enable and accommodate more types of securities, but we will improve this. We’re looking into putting in easier criteria for companies to list, to make things more clear, and to make more flexible approaches for categorizing.

Are there plans to tap the all the dollars flooding your market?
We want to see if there’ll be changes at the policy level that can accommodate listing of dollar-denominated securities. That will absolutely expand the market because half of the money supply is in dollars. Currently, we have repatriation issues. There’s a lot that needs to be sorted out if we are to bring in more foreign investors.

What makes the MSE worth investing in today?
This year will be a very defining year for the Maldives; there are a lot of new projects coming up, many of which are being led by foreign investment. We’re looking at dual listings with the Colombo Stock Exchange (CSE) and the Stock Exchange of Mauritius (SEM). We’re working on implementing a framework that is suitable for us to list on the CSE dollar-denominated board. The more foreign investment that comes in, the more the government will be looking into avenues where foreign companies can be listed on the stock exchange so that there will be more public engagement, more diversity, and more sharing of economic wealth.