It has been quite difficult for me to make out the causes of the "froid" that has allegedly subsided on the Mauritian business community by the statement of the Minister of Economic Development, Financial Services and Corporate Affairs on the peculiarities of share ownership of some of the listed companies of our Stock Exchange.
What has been confined for too long to the subtle quarters of "La Haute finance" was finally allowed to percolate to the commonest of the average person who still has a higher rating for his returns from the Tote-Bookmaker system compared to his yield gap on the Stock exchange. But the cold must have come from elsewhere for most of those present to hear that statement could not pretend to be the average person. And the above average person knows very well that even "la haute sphere" of policy-making in
Government did raise this issue in their official document, "Into the 3rd Millennium": "the degree of market concentration ( in the capital market) is relatively high, reflecting a characteristic feature of mauritian business which is dominated by a few large companies. The relatively low turnover ratio may also be attributable to the concentrated nature of share ownership." It goes further than that to assert that "the lack of financial instruments and the inter-locking ownership between compa-nies and banks distort the allocation of credit and prevent the evolution towards a well-functioning competitive financial struc-ture."
And if I were to add that the Stock Exchange is simply a tax shelter for most of the listed companies, it will be exaggerating to expect that the whole financial system to catch a flu, like the Asian flu that unveiled the unsound practices of the Asian financial structure. Similarly when Tim Taylor rightly points out that France also has family—controlled companies, we should not expect an irra-tional exuberance of our business community.
For the timely "Time" article of July 16 titled "Learning how to share" warns us that the world trend is inevitably moving away from the European system of an "intricate web of interde-pendent, often family controlled companies protected by the state from competition" (note our high effective tariff rates) "and meddlesome outsiders" (especially in our sugar sector} "towards a system of lightly regulated markets and shareholder-driven capitalism."
Individual stockmarkets are increasingly being driven by global rather than local factors and Europe will have to come to terms to the gospel of the open market that will gradually erode the "dee-ply elitist European system that has kept predators at bay through cross-holdings and has preserved the wealth and power of a few families and big banks."
