On the 7th April 2020, the Malta Financial Services Authority (“MFSA”) issued a media release in light of the impact on the local regulated market due to the recent outbreak of COVID-19, where it explained that the MFSA is continuously engaging with the Malta Stock Exchange to monitor the situation closely.
The MFSA noted that the Malta Stock Exchange is operating normally, and although it has been impacted by the global trend of a drop in prices, this has not been to the extent of that registered in foreign markets. Moreover, during the last month, there has been an increase in trading activity, where several investors are actively trying to exit the market. This was counterbalanced by a number of investors who are taking the opportunity to invest in the securities at discounted prices.
For investors to make an informed decision, it is necessary for them to have a good information flow, especially during these times where markets can be extremely sensitive to any piece of information.
The MFSA further noted that due to the present circumstances, issuers and their auditors are confronting challenges in preparing and auditing financial information. Given the unknown extent of duration of the present situation, the most affected issuers finding it difficult to predict their financial performance are mainly those in the hospitality, tourism and retail business. In the meantime, measures taken by governments and health authorities to contain this pandemic, will remain in force. Moreover, to ease interruptions in businesses and households, the government is introducing measures which are developing rapidly, with the possibility of further development.
In view of the above, the MFSA has taken the following actions to ensure that information continues to flow to investors without adding extra pressure on issuers during these difficult times:
1. Publication of Circulars
The MFSA has issued several circulars to ensure that adequate information is provided and which can be accessed through the MFSA's website.
2. Engaging with different stakeholders
In addition to the above, MFSA is in regular contact with the Malta Stock Exchange and stockbrokers, issuers and financial auditors. The MFSA advised issuers to assess their financial position and publish company announcements on time in order to update the market with such an assessment. The MFSA noted that some issuers have already published announcements covering the effects of COVID-19 on their business. Indeed, in March 2020, company announcement publications doubled up compared to last year during March 2019 and although in the MFSA’s view, some of the company announcements may be considered imprecise, the full implication of the COVID-19 pandemic on the relevant business may not be straightforward to predict.
It is expected that the content of financial information and audit work done will not be the same as previous years. Auditors may cast significant doubt upon a company’s ability to continue, and so they are expected to be more attentive to the uncertainty surrounding situation. In this regard, the MFSA is in close contact with auditors and the Malta Institute of Accountants to discuss difficulties being encountered and to discuss possible solutions.
Finally, the MFSA stated that it will keep monitoring changes in the local regulated market and will be willing to use the powers granted to it in order to ensure the proper functioning of markets, financial stability and investor protection.
Please feel free to contact us should you require further information in relation to Maltese regulated markets.