Wealthy Warren's wisdom

Warren Buffet, the world's second richest man - who made his mega fortunes on the stock market - in comments at the 2005 meeting of his flagship company Berkshire Hathaway, stated: "There are two times when investors forget their investment principles: at the top and at the bottom of the market".

Only time will tell whether the Maltese market today has more upside potential than downside risk. So when does one apply Warren's wisdom in this second nugget from the same meeting: "What we learn from history, is that people don't learn from history."

Have Maltese investors' learnt from history? The persistently low volumes on the Exchange would indicate that Maltese investors are, in fact, ignoring the Sage of Omaha's insights.

This week saw equity turnover by value come in at Lm513,085, the fifth lowest for the year. On the bright side, it was a generally positive week. The Alternative Companies List Datatrak plc (DTK) proved to be the market's wild card, as it advanced an extraordinary 19.2% to 31c. On the Official List, GlobalCapital plc (GCL) made substantial headway, up 8.5% to Lm2.23. The worst performers were Suncrest Hotels plc (SCR), down 7.9% to 26c7, and Maltacom plc (MLC), 4.1% lower at Lm1.63. The MSE index ended the week 0.6% higher at 5,131.555.

Bank of Valletta plc (BOV) started the week at Lm3.98, advancing to Lm3.99 by the close of Monday's rather laid back session where a mere 2,320 shares changed hands for a turnover of Lm9,255. It was stable at Lm3.99 on Tuesday but dropped a cent to Lm3.98 on Wednesday, trading at an intra-day low of Lm3.97. The three deals struck at Thursday's half-hearted session were carried out at minimally different price, with the final deal struck at Lm3.979.

On Friday, BOV started at Lm3.975 and after a near hour-long nap resumed trading down to Lm3.95 and Lm3.94. It then re-traced its steps to Lm3.97 to close the week practically unchanged, just a cent lower. At the close of trade best bids totalled 850 shares at Lm3.86, while supply for 2,500 shares started at Lm3.969.

On Thursday, BOV announced that the board will meet on Friday to consider and approve the bank's audited financial statements for the financial year ended September 30 and to consider the declaration of a final dividend.

HSBC Bank Malta plc (HSB) opened the week unchanged at Lm2.03, trading uneventfully at this level on Monday and Tuesday. It broke free from this price on Wednesday, opening at Lm2.05 and closing at Lm2.08. These gains came undone on Thursday as HSB slipped back progressively, settling at Lm2.04. However, in pure see-saw mood, Friday saw HSB open at Lm2.04 to rise to Lm2.079 by the close, ending the week up 2.4%. At the end of trading, the best bid was for 10,466 shares at Lm2.04, while the best offer for 1,000 shares stood at Lm2.078.

In MLC, the previous week's engaging gain was swiftly erased during Monday's session: after opening a cent down, at Lm1.689 MLC tumbled to Lm1.635 by the end of trading. The negative sentiment spread to Tuesday, as the equity fell a further 1c8 to close the day at Lm1.617. This price was maintained on Wednesday and advanced modestly to Lm1.62 during Thursday's solitary deal for 600 shares.

Friday saw MLC advance a cent in the final deal to end the week 4.1% lower at Lm1.63. At the end of the session, the best bid was for 2,500 shares at Lm1.605 and the best offers for 2,000 shares at Lm1.65.

Malta International Airport plc was active on Tuesday, Thursday and Friday - it did not rock the boat, trading unchanged at Lm1.37, with the exception of two deals carried out early on Thursday at Lm1.369. Turnover was subdued with just over 10,000 shares changing hands for a market value of Lm14,186. At the end of the week, best bids were for 744 shares at Lm1.37, while offers for 3,475 shares started at Lm1.40.

GCL enjoyed a prosperous week: it was up 4c to Lm2.10 at the open on Monday, leap-frogged from Lm2.15 to Lm2.22 on Wednesday and continued ahead to Lm2.25 on Thursday. Friday's quiet session saw three of the days' four deals carried out at this price, with the final deal matched 2c lower at Lm2.23 - a vigorous 8.2% gain on the week.

Lombard Bank plc was another positive performer. It gained 3c to Lm3.68 on Monday, only trading again on Friday. Here, it traded at Lm4.75 for most of the session, climbing to Lm4.81 in the final trade, to post a 3.4% advance for the week.

Middlesea Insurance plc scraped the bottom of the barrel on Monday when it fell to Lm1.965. It managed a little advance to Lm1.97 on Tuesday, and closed at Lm2 on Thursday, marking the start of a recovery as the price rose above Lm2 on Friday: it traded at Lm2.01 and closed at Lm2.02, to end the week 2.5% up. It is encouraging to note that this price is supported by an outstanding bid for 800 shares, with supply for 994 shares starting at Lm2.05.

Plaza Centres plc traded on Tuesday, inching up a little further to close at a six-month high of 67c9. Turnover consisted of 7,599 shares for a value of Lm5,155. Simonds Farsons Cisk plc was active on Thursday and Friday, trading unchanged at 76c on turnover of 9,752 shares for a market value of Lm7,412.

SCR, which had only traded twice this year, doubled its activity by trading twice this week! It traded at 25c on Monday, a startling 13.8% drop from the previous close of 29c on 25th July, but advanced to 26c7 when 1,200 shares change hands on Wednesday. Despite this, the net effect still saw SCR shed 7.9%, to earn the title of worst performer of the week.

Fimbank plc suffered a 2.9% loss on the week. The price sagged to $1.70 as selling pressure kept the price depressed.

International Hotel Investments plc was active on Monday and Tuesday at €0.96 throughout, one euro cent lower on the previous week. On Thursday the board announced it will meet on Wednesday to approve the financial statements for the period ended June 30.

However, the week's darling was DTK. With the trade range temporarily removed on Monday, DTK leapt up to 30c, progressing to 31c on Tuesday. It traded at the same price on Thursday to close a remarkable 19.2% ahead. On Tuesday, DTK's board met to discuss and approve the interim financial results for the six months ending June 30. Profits before tax increased substantially by more than 250% from Lm14,918 to Lm52,397. The loss per share attributable to equity holders of the parent changed from -0c1 to -0c2.

On Wednesday DTK announced that on November 20 an extraordinary general meeting will be held for shareholders on the register at close of business on October 25. A resolution proposing that accumulated losses within the Datatrak Group be offset and absorbed against the share premium account of Datatrak Holdings plc will be made. This will wipe out all accumulated losses and will enable directors to consider a declaration of dividends once the group's books show distributable profits from operations.

The Closed Ended Investment Scheme Santumas Shareholdings Ltd gained 4.5% to Lm1.15 in one deal for 1,826 shares.

Next week we will see the listing of Medserv plc's 10 million ordinary shares. Trading in these securities is expected to start on Tuesday. This is the first new equity listing since December 2002.

Activity in both Government bonds and corporate bonds was quieter this week. There were 58 deals in Government bonds for a total value of Lm336,669.46. In the corporate bond market, turnover by value reached Lm92,930.45 spread over 29 deals.

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Report by Financial Planning Services Ltd., tel: 2134-4244, fax 2134-1202, e-mail matthew@bonellofinancial.com, elaine@bonellofinancial.com