Issue link: https://maltatoday.uberflip.com/i/1474708
9 EDITORIAL BusinessToday is published every Thursday. The newspaper is a MediaToday publication and is distributed to all leading stationers, business and financial institutions and banks. MANAGING EDITOR: SAVIOUR BALZAN EDITOR: PAUL COCKS BusinessToday, MediaToday, Vjal ir-Rihan, San Gwann SGN9016, Malta Newsroom email: bt@mediatoday.com.mt Advertising: afarrugia@mediatoday.com.mt Telephone: 00356 21 382741 W ith just 27 listed compa- nies, the Malta Stock Ex- change is not an attrac- tive option for investors seeking a shareholding in Maltese companies. e problem is exacerbated by the lack of diversity in the offer- ings. Nine companies are involved in real estate development and re- tail malls, four are banks, two are insurance firms, three are software and technology companies and the rest are singular companies in dif- ferent fields, including telecommu- nications, a postal service, a hotel, an airport and a brewer. e lack of diversity in the sectors available for share investment and the dearth of alternatives within the same sectors, contribute to a gener- al lack of trading. It is quixotic how the MSE only has three technology companies listed when abroad such companies are often floated to raise the nec- essary capital to invest in research and development. Something, somewhere is not functioning well. Nobody can ex- pect the MSE to be at par with stock exchanges in more prominent jurisdictions but in order for Malta to up its game there needs to be a concerted effort to encourage com- panies to float their shares. e genetic make-up of Malta's business sector with largely fami- ly-owned companies is not condu- cive to stock market flotation. In fact, most of the larger companies opt for the relatively safer bond options as an alternative to raising capital through banks. ere is also the issue of cost. Floating on the stock exchange comes with onerous obligations towards shareholders, requiring a company structure that provides for full transparency and resources that come at a cost. Not many companies are willing to go through such an overhaul that may disrupt traditional busi- ness models and structures, while opening up the firm to increased scrutiny. Nonetheless, the benefits of stock market flotation cannot be under- stated in a dynamic market. Banks are flush with liquidity. De- posits shot up during the pandem- ic despite the unattractiveness of bank deposit interest rates. is may be the right time for companies, especially the larger ones that have a partial experience with the flotation of bonds, to con- sider opening up to a diversified shareholding base. ese compa- nies may already have the necessary reporting structures in place. Within this context, the MSE must adopt a pro-active approach to engage with potential aspirants for listing and understand their hesitation or resistance. At the same time, Malta requires more investor education to ensure that people with extra liquidity can invest judiciously on the MSE. ere are too many people who just park their money with one company without diversifying their portfolio whatever happens. Some do not even rely on expert advice, which makes for the MSE's drab performance. But the underlying issue remains the poor offering, which can only change if Maltese companies be- come bolder and up their game. In a post-COVID recovery, this may be an option companies should consider. The stock echange must become an attractive option for investment 28 JULY 2022