The mystery of the Maltese market

A year ago we penned an article for a local specialised publication under the title 'What price advice?' We included a graph headed 'Malta fior del mondo - or fuor del mondo?'.

This highlighted the percentage change of seven of the world's major stock indices (Dow Jones, Nasdaq, FTSE 100, CAC 40, DAX, Nikkei and the Hang Seng) from their all-time high to February 28, 2006.

Every single one of these indices was then below its respective all-time high. The Dow Jones was the closest, just 6.2% short, while the Nikkei was the farthest away - 58.4%. By comparison, the Maltese Stock Exchange Index was not simply ahead of its previous all-time high of January 2000, but, to boot, a colossal 51.7% higher!

The same graph compared the percentage increase of these markets from their October 30, 2002, low to the February 28, 2006, close. Again the Maltese index had a stratospheric 264% increase.

This was three times as much as the second best performer, the German DAX, with an 86.2% increase, and close to nine times as much as the Dow Jones, with the worst recovery of 30.5%.

We ended the article: "The conclusion as to which markets have the better potential is obvious." As of last Friday's close the MSE Index is down 24% from its all-time high on March 28, 2006.

As we write, the Dow Jones closed at a fresh all-time high on Thursday night - its 27th consecutive one since early October 2006. Of the other six indices and their percentage change from their 2006/7 highs, the three European markets are at intra-day highs, the Nikkei is a sliver away, whereas the Nasdaq and Hang Seng are less than 1.4% short of their highs last month.

Conclusion: the current sentiment in international markets is akin to the euphoria of a City trader with champagne running through his veins on bonus day.

Conversely, it is symptomatic of investor psychology to stay away from relatively attractively priced shares when low turnover, during a market in bear mode, is used as justification to delay entry - probably the best description of the Maltese investor's market attitude right now.

Last week was another slow one on the Malta Stock Exchange, albeit 37% higher than the previous week's. However, momentum did pick up in the last two days, even if prices stayed generally soft.

The mid and small cap stocks managed to inject some excitement. International Hotels Investments plc (IHI) once again was the week's best performer, jumping 3.7%. In terms of turnover by value, it stood its ground, netting just a few thousand liri less than the index stalwarts, Bank of Valletta plc (BOV) and HSBC Bank Malta plc (HSB).

The second best performer was the recently listed Medserv plc (MDS), up 2.2% to Lm1.40, and third place went to Plaza Centres plc (PZC), up 1.3%.

Large cap stocks were a disappointment, with HSB down 1.4%, Maltacom plc (MLC) down 1.3% and BOV down 0.8%. The MSE index ended the week at 5,049.21, 0.78% down.

BOV retreated modestly on Monday, opening at Lm3.668 and closing at Lm3.67. Trading on Tuesday was flat at Lm3.67, with the final deal effected at Lm3.679.

Wednesday was by far the quietest session, with only 1,675 shares changing hands in three deals, at Lm3.675, Lm3.669 and Lm3.67. By Thursday's close BOV had lost 1c to Lm3.66, falling nearly another full cent to Lm3.651 by Friday's close to end the week 0.8% lower.

In total, 19,303 shares changed hands for a value of Lm70,760. At the end of trading, best bids totalled 770 shares at Lm3.651, and supply of 1,500 shares started at Lm3.66.

HSB started the week slightly lower at Lm2.10, slipping to Lm2.097 for the final deal. On Tuesday, with a meagre turnover of 1,250 shares, the price slipped to Lm2.095.

The downward trend extended to Wednesday, down to Lm2.086, and to Thursday, as HSB traded lower at Lm2.085 and Lm2.08, ending Friday at this latter level.

The total volume for the week was 39,523 shares, worth Lm82,419. At the end of trading, the best bid was for 1,076 shares at Lm2.07, and the best offer for 1,400 shares stood at Lm2.08.

MLC opened the week unchanged at Lm1.48 on slim turnover, maintaining this price on Tuesday when a mere 100 shares changed hands.

The price held on Wednesday and for the early part of Thursday, before slipping to Lm1.46. It did not trade on Friday, ending the week 1.3% lower.

Turnover for the week totalled just 6,200 shares for a market value of Lm9,093. At the end of the session, the best bid was for 1,050 shares at Lm1.46 and the best offer for 1,128 shares at Lm1.48.

Malta International Airport plc (MIA) only traded twice - on Monday and Thursday. Monday was comparatively active with 13,710 shares changing hands, a few mils lower at Lm1.381 and Lm1.38.

Thursday's trading was restricted to 969 shares, again at Lm1.38, ending the week a minimal 0.4% down. At the end of the session, best bids were for 2,360 shares at Lm1.34 and offers for 1,031 shares started at Lm1.365.

The best performance came from medium cap IHI, up for the fourth consecutive week. It was active each day, up from €1.099 to €1.13 on Monday, down to €1.10 on Tuesday and back up to €1.11 on Wednesday.

Thursday saw it return to €1.13 and Friday's erratic session marked an all-time record close of €1.14. On Wednesday, IHI announced that shareholders approved all the resolutions on the agenda at the extraordinary general meeting.

MDS opened the week on a positive note, advancing to Lm1.379 and Lm1.38. It gained further momentum on Tuesday, pushing ahead to Lm1.40. It only traded again on Thursday, again at Lm1.40 to end the week up 2.2%.

On Wednesday, Medserv announced that it has entered into a Memorandum of Understanding with Misurata Free Zone, an authority established by Libyan GPC Decree 32/2006 in the business of owning and operating the Misurata Free Zone.

The principal terms include the incorporation of a joint stock company to be called Medserv Misurata Free Zone Co., primarily to operate a logistics and supply base and to service the oil and gas industry, both offshore and onshore, in Libya.

PZC was only active on Tuesday when 6,000 shares were traded. The price progressed 1.3% to 71c - 1c off it's 2006/07 high.

FIMBank plc (FIM) started Monday unchanged at US$1.73, inching 1c ahead to $1.74 on Thursday to end the week 0.6% ahead.

Trading in Lombard Bank plc was limited to 1,500 shares on Friday at an unchanged price tag of Lm5.40. Simonds Farsons Cisk plc was similarly static at 82c on a weekly volume of 2,900 shares for a value of Lm2,370.

GlobalCapital plc, which had not traded since January 10, was the week's worst performer, shedding 3.4% to Lm2.125. All the week's volume of 7,913 shares was transacted at this price.

Middlesea Insurance plc lost 1c to Lm2.04 on Monday, was stable on Tuesday and lost another 1c to Lm2.03 in Thursday's final deal. It did not trade on Friday, ending the week 1% down.

Datatrak plc (DTK) first advanced to 25c on Wednesday on turnover of 4,000 shares but was back at 24c5 on Thursday's single deal for 3,921 shares.

On Thursday DTK announced that DTK IT Services Ltd, one of its subsidiaries, has partnered with Medcomms Ltd to offer Malta-based maps for satellite navigation, which are expected to be available in Malta and Gozo as from March 28.

In the Government bond market 47 deals were completed for a turnover by value of Lm692,348. The most active stock was the 5.4% MGS 2010 (iv) with a total value of Lm477,284.

In the corporate bond market, turnover by value reached Lm41,520 spread over 29 deals.

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.