MSE Index drops more than the Dow

A thousand-point drop on an Index sounds scary, doesn't it? Equally, a thousand-point increase can be the stuff to send investors' spirits soaring.

Well, this week we saw the scary stuff on Japan's Nikkei index: between last Monday's close of 18,215 - its highest in nearly seven years - and Friday's 17,218 close, the 1,000 points translated into a one-week drop of 5.5%.

The Hang Seng's 1,000 plus points drop (Friday to Friday close) translates into a 6.1% decline.

What about the "spirit soaring" stuff? Let us take three 1,000-point increases on the weathervane of the world's stock markets - the US Dow Jones Industrial Average (the Dow).

The first happened between November 14, 1972, when the Dow closed above 1,000 for the first time in its history, and January 8, 1987, when it first closed above 2,000. That is a 100% increase in just under 14 years and two months, say half a generation in which to double your money.

Another 1,000-point increase, from the 4,000 level to 5,000 on the Dow, this time translated into 'only' a 25% increase in nine months, between February 23 and November 21, 1995. Finally, the Dow took just five months - less than half a year - to gain the lowest percentage on a 1,000-point increase: from its 7,000 level on February 13, 1997, to the 8,000 mark on July 16; the gain was 'only' 14.3%.

Conclusion: ignore the references to "points" - whether increases or decreases. It is the percentage that matters - not the points.

In the most turbulent week on international markets, since the aftermath of September 11, mainly triggered off by growing concerns about slowing economies in the US and China, the Dow, the daddy of all indices, dropped 3.56%.

Coincidentally, this is precisely half the 7.13% one-day drop that the Dow suffered when US markets reopened on September 17, 2001.

The week's drop in the MSE Index (3.73%) actually marginally exceeded that of the Dow. Our local market sentiment could neither have been dented by any comments from former Federal Reserve chief Alan Greenspan, nor by China's biggest one-day drop (9%) in more than 10 years.

It is more likely that the bear market, which started last year, after levelling off and attempting a comeback, may have dipped into its second leg - led by a near 10% drop in HSBC Bank Malta plc (HSB) after the price went ex dividend.

Bank of Valletta plc (BOV) went on a merry go round to start and end the week close to flat. Starting practically unchanged at Lm3.676, it closed Monday at Lm3.689 with only 2,710 shares being traded in a slow session.

While Tuesday's session was markedly more active, the price closed at Lm3.68. Wednesday's opening and closing price of Lm3.65 belies relative stability; in fact the price plunged to Lm3.60 and only recovered to Lm3.65 for the final two trades.

Thursday's mood was more upbeat as BOV traded at consistently higher prices, starting at Lm3.65 and ending at Lm3.678. On Friday it opened flat but reversed to Lm3.65 before recovering to a Lm3.67 close for a minor 0.2% drop on the week.

Turnover totalled 33,591 shares for a value of Lm122,834. At the end of trading, best bids totalled 167 shares at Lm3.627, with a supply of 882 shares at Lm3.67.

HSB had a disastrous week. It kicked off just a mil lower at Lm2.124 and was stable for an hour into trading. Monday's final four deals, stretched out over a full 40 minutes, took the price down to a Lm2.099 close.

Tuesday, the last cum dividend purchase date, saw the price unexpectedly skid down a virtual chute from a Lm2.089 open to a Lm2.011 close - a bruising 3.7% loss on the day. When HSB turned XD on Wednesday, it shed another substantial 9c2 to Lm1.919 - the bottom of the allowable trade range.

While the first 30 minutes of Thursday saw HSB fall further, hitting an intra-day low of Lm1.891, it managed a mild turnaround, climbing to a Lm1.93 close - the week's only day in the plus column.

The positive vibe spilled over to Friday, with HSB up to Lm1.949 within 45 minutes of the open. Profit taking a few minutes from the close dragged the price back down to Lm1.92. Result? HSB lost a thumping 9.6% on the week. Turnover for the five days totalled 156,115 shares, which at Lm305,792 accounted for 58% of the week's total equity turnover by value.

At the end of trading, the price was supported by a bid for 2,000 shares at Lm1.92, and the best offer for 189 shares stood at Lm1.93.

Maltacom plc (MLC) finally enjoyed a positive week, up 2.8% - the Official List's best performer. It started the week close to where it left off (Lm1.421), advancing to Lm1.43 on turnover of just over 9,500 shares, staying at this level on Tuesday and Wednesday.

Thursday saw a Lm1.43 kick-off price, gaining 2c to Lm1.45 during the most active session of the week, in which 12,259 shares change hands. Friday saw MLC inch ahead to Lm1.46 in the final deal to end the week 2.8% ahead.

A total 38,693 shares were traded for a value of Lm55,628. At the end of Friday's session, the best bid was for 690 shares at Lm1.45 and the best offer for 1,491 shares at Lm1.465.

MLC's streamlining of subsidiaries continues apace with the absorption into the parent company of Monitoring Services Ltd, announced on Friday. The company also announced that the board will meet on Monday, April 2, to consider and approve the final audited accounts for the year end December 31, 2006, and consider the declaration of a final dividend to be recommended to the AGM.

Malta International Airport plc (MIA) opened and closed on Tuesday at Lm1.385, rising 5 mils in between. On Wednesday it advanced to Lm1.397, was back to Lm1.38 on Thursday, and closed at Lm1.39 on Friday - virtually unchanged, up 0.3%.

Total activity for the week was 14,210 shares for a value of Lm19,712. At the end of the session, best bids were for 900 shares at Lm1.36 and offers for 300 shares started at Lm1.39

MIA's results were published on Thursday afternoon. They refer to a non-comparable period since there was a change in accounting reference date, which now coincides with the calendar year.

For the nine months from April 1 to December 31, 2006: the pre-tax profit was Lm4.9 million, revenue was Lm14.1 million, staff costs totalled Lm2.6 million and operating expenses came in at Lm4.75 million. Earnings per share stand at 4.61c.

The board is proposing that the AGM approve the payment of a gross dividend of 3c38 (net 2c2) to shares settled as at close of business on Monday, April 23, i.e. share purchases made by Wednesday, April 18.

FIMBank plc started the week unchanged at US$1.867, despite the fact that it was trading ex dividend, inched ahead to $1.87 on Tuesday, only to lose ground ever so slightly on Wednesday at $1.867. It traded 1.8 US cents down on Friday, to close the week 1% down at $1.849.

Three shares only traded on Monday: Simonds Farsons Cisk plc rose to 85c but closed unchanged at 84c; Middlesea Insurance plc was static at Lm1.98 in one deal for 480 shares; and International Hotel Investments plc was practically unchanged at €1.115 on turnover of a mere 2,000 shares worth Lm957.

Medserv plc did not move from Lm1.42, trading at this level on Monday and Thursday.

GlobalCapital plc made an appearance on Friday when 600 shares changed hands; it closed flat at Lm2.02.

Newly listed on Thursday, Grand Harbour Marina plc ended its first trading session on Friday with no activity. Bids for 11,000 shares at 70c (the IPO price) were balanced by an offer for 5,000 shares at 73c.

On the Alternative Companies List, Datatrak plc continued to make headway, rising to 26c5 on Monday. It did not trade again to end the week 3.9% higher - the week's best performer.

The Government bond market slowed down considerably, with turnover by value reaching Lm1,055,694. In the corporate bond market turnover was very low at Lm30,969 spread over 14 deals.

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