What the Dickens - it's Christmas!

The following is from a talk last June in San Diego. The speaker is Don Connelly, a senior vice-president of Putnam Investments, which manages US$200 billion: "Picture two divers standing high on a cliff in Acapulco. One is a veteran and the other is a rookie.

"The rookie intuitively wants to jump when the water below is at its highest level. When he finally lands, the water will be gone. The veteran will jump when there is no water below - all he can see is rocks. That's a scary thought. But, when he finally lands, the water will have returned and risen to its highest level."

Four weeks ago, we headed this column 'A watchful eye says it's time to buy' - adding the proviso "we may not be on the brink of a new bull market yet, but neither will the current string of gloom continue forever".

This time four years ago, the P/E ratios of the MSE Index's major components, Bank of Valletta plc (BOV) and HSBC Bank Malta plc (HSB), were in the lowest possible double digits. Veterans were seeing the rocks and deeming it the right time to dive in.

Today, BOV's P/E ratio stands at 15.4, and HSB's is 50% higher at 23.5 - although the 2006 results in about six weeks' time could redimension this multiple.

Last spring's 'Great Expectations' today grate. But, what the Dickens! Let's enjoy Christmas

Let us now review the last full trading week of the year: the MSE Index closed 1.2% lower at 4,868.316, just 52.9 points away from the year's low of 4,815.343 on January 5.

HSB, the largest constituent of the MSE Index, was Scrooge-like in its dismissiveness of the Christmas spirit. Starting the week at Lm1.969, it closed on Monday at Lm1.97 and dipped further to a Lm1.955 close on Tuesday.

This price held for Wednesday's opening but then slid back to Lm1.95 and a Lm1.949 close. Thursday saw all trades go through at Lm1.95, as did most of Friday's, except for the final four deals which dragged HSB to Lm1.94 - a fresh post-bonus low, and within a whisker of its January 6 low of Lm1.938. Notice that that the MSE Index low was just one day earlier.

At the end of trading, the best bid was for 7,000 shares at Lm1.93, and the best offers for 5,000 shares stood at Lm1.955. As is customary, HSB commanded the lion's share of trading with 186,763 shares changing hands, accounting for Lm365,052 - 43.5% - of the week's total equity turnover by value of Lm838,796.

BOV kicked off the week flat at Lm3.59, advanced to Lm3.60 mid-session but slipped to a Lm3.589 close. Tuesday's sporadic trading was carried out at between Lm3.585 and Lm3.587, with the final deal struck at Lm3.59.

Wednesday's lacklustre trade saw the first two deals negotiated at Lm3.585, with the remaining trades effected at Lm3.58. This price stuck steadfastly on Thursday and Friday to end the Christmas week close to flat, down 0.3%.

Total turnover for the week amounted to 36,698 shares for a market value of Lm131,638. At the end of trading best bids totalled 250 shares at Lm3.575, and supply for 980 shares started at Lm3.585.

BOV announced on Monday that it has subscribed for one million shares of Lm1 out of an issue of two million shares, in Middlesea Valletta Life Assurance Co Ltd. These shares were allotted on December 15 to existing shareholders on a pro rata basis. Thus the bank retained its shareholding at the 50% level.

On Thursday BOV announced that all the resolutions on the agenda were approved at the annual general meeting on Wednesday. The following directors were reappointed: Joseph Borg, Marlene Mizzi, George Portanier, Norman Rossignaud, James Vella and George Wells.

Maltacom plc (MLC) opened badly on Monday, sliding from a Lm1.495 open to a Lm1.45 close - a fresh low for 2006. Tuesday only saw a handful of trades, transacted 20 minutes from the close at the same price.

Trading on Wednesday got going even later, at 11.45 a.m., rising from a Lm1.45 open to Lm1.468 close. MLC did not trade on Thursday and put in a token appearance on Friday with one trade for 2,500 shares at Lm1.47, thus softening the week's loss to 1.7%.

At the end of the session, the best bid was for 2,500 shares at Lm1.45 and the best offer for 2,500 shares at Lm1.475. Activity for the week amounted to 41,636 shares for a market value of Lm61,153.

Malta International Airport plc was only active on Monday and Tuesday. It stumbled to a Lm1.32 open on Monday, recovering to Lm1.335 to close unchanged. It was stable on Tuesday closing the day - and the week at this price.

Notwithstanding, volume was a relatively respectable 22,925 shares for a value of Lm30,566. At the close of Friday's session, encouragingly, best bids totalled 3,400 shares at Lm1.35 and offers for 3,129 shares started at Lm1.37.

Small cap stocks had a poor show with three out of eight not trading. Of the ones that did trade, Lombard Bank plc (LOM) was the only one to shine: it advanced 5c to Lm5.15 for Monday's opening deals rising to Lm5.20 by the close.

It continued to gain ground on Tuesday, climbing to Lm5.25 and Lm5.30, rising a further 5c to Lm5.35 on Wednesday - the last trade for the week. This made LOM the week's top performer with a 4.9% gain.

GlobalCapital plc (GCL) started the week flat at Lm2.10 but burst into action on Wednesday when a buying spree of 32,100 shares vacuumed up all existing supply from Lm2.10 to Lm2.24.

The gains were short-lived as GCL slumped to Lm2.10 for Thursday's opening deal, but yo-yoed back to Lm2.209 for the second and last deal of the day. It fell back to Lm2.101 in Friday's single deal for 800 shares to end the week almost unchanged, an inconsequential 0.05% higher.

Medserv plc traded consistently - but uneventfully - at Lm1.35 from Monday to Thursday. Likewise, FIMBank plc (FIM) was stable at US$1.70 on the three days it traded with turnover at 136,100 for a market value of Lm75,554.

On Tuesday FIM announced that the board is meeting on February 21, 2007, in Kuwait City to consider and approve the audited annual financial statements of the company as at December 31, 2006, and to consider the payment of a dividend.

Middlesea Insurance plc (MSI) lost 1% to Lm1.98 in the week's only deal for an irrelevant 116 shares. MSI announced on Monday that it has subscribed for one million shares of Lm1 from an issue of two million shares in Middlesea Valletta Life Assurance Co. Ltd.

These shares were allotted on December 15 to existing shareholders on a pro rata basis. Thus the company retained its shareholding at the 50% level previously held.

Datatrak plc was practically flat, up a minuscule 1 mil to 25c1 on Wednesday on a turnover of 4,000 shares.

On Wednesday Suncrest Hotels plc announced that pursuant to the allocation policy adopted by AX Investments plc for the issue of Lm5 million 6.7% Bond 2014-16, applications submitted by Suncrest bondholders were met in full.

Interest on the new AX bond, which is expected to be listed on January 3, 2007, started on Thursday. The board of Suncrest Hotels has given notice that the remaining balance of 8.25% Suncrest Bonds 2005-07 will be redeemed on maturity on March 23, 2007.

It was also announced that AX Investments plc will be acquiring 1,883,483 Suncrest Hotels plc shares, 92% of the total of 2,045,000, thereby issuing Lm930,000 in the 4% bonds 2013 and paying Lm8,064 in cash. Interest on the 4% bond began yesterday.

In Malta Government Stocks there were 42 deals with a turnover by value of Lm618,273.61. Activity in corporate bonds picked up last week with 22 deals completed for a total turnover by value of Lm44,069.44.

We wish all our readers a Merry Christmas!

Financial Planning Services Limited is licensed by the MFSA to provide investment services, including stockbroking (IS/3608). The company is involved in acting as sponsoring stockbroker and corporate stockbroker. The directors or related parties, including the company, and their clients, are likely to have an interest in securities mentioned.