World markets simmer, Malta's snoozes

Three of the world's major markets hit new all-time highs last week. In Europe, on Monday, the German Dax Index, composed of 30 top companies - from Adidas to Volkswagen - closed at 8,105.69, up 24% from its 2007 low hit on March 14.

In the US, the Dow Jones Industrial Average, also made up of 30 of America's best known business names - from 3M to Walt Disney - crossed the 14,000 level during trading, every day of the week.

However it only closed above 14,000 on Thursday night. Precisely nine months earlier, on October 19, 2006, the Dow had closed above the 12,000 level for the first time, and just six months later, on April 25, it stepped up another 1,000 level rung, closing at 13,089.89. In performance terms this equals 16.5% in nine months, and 7% in the last three months.

In the Far East, on Friday morning, Hong Kong's Hang Seng Index, made up of 39 major names in China and the Far East, hit its own new all-time high of 23,291.90 - up 25% from this year's low on March 5.

So it looks like international markets are very much in the "go beyond" stage we wrote about two weeks ago. However, with the bull market in international stocks well into its fifth year, it was not particularly surprising to read: "Credit Suisse sees a big correction in world stock markets by the end of this year, once interest rate increases in Japan have begun to accelerate."

Giles Keating, head of research at Credit Suisse's private bank and asset management business, said at a briefing on Thursday: "We could see a continuous uptrend over the next six months, driving valuations perhaps above the fair value, and then we see a significant pullback before a longer bull market can resume."

Guidance on the way forward may be gleaned from the famous Chairman's Letter in the Berkshire Hathaway Annual Report, written by time-tested investment guru Warren Buffett. Remember that, with a fortune of $52 billion, he is the second richest man in the world - and that he made his fortune through his investment principles.

The following lesson in investment is picked from his 1996 Chairman's Letter: "Your goal as an investor should be simply to purchase, at a rational price, a part-interest in an easily understood business whose earnings are virtually certain to be materially higher, five, ten, and 20 years from now.

"Over time, you will find only a few companies that meet those standards, so when you see one that qualifies, you should buy a meaningful amount of stock."

When honing in on the share(s) to select, also keep in mind what Peter Lynch, the legendary manager of the Fidelity Magellan Fund, and author of One up on Wall Street, has often said: "People do more research on a $1,000 purchase of a refrigerator than they will do before they spend $10,000 on a stock."

Apply this to both the local market and other euro-denominated shares - since we join the Eurozone in just over five months. Naturally, selecting one or two qualifying shares from locally listed ones should not really present a major problem.

The slowdown in business on the Malta Stock Exchange saw last week's poor equity turnover of Lm289,785 rank as the second worst for 2007. Positive vibes were hard to find with only two equities ending the week in the plus column.

Then again, the best performing equity - FIMBank plc (FIM) - mustered all of 0.5%, followed by Bank of Valletta plc's (BOV) 0.1%; on the other hand GlobalCapital plc (GCL) lost 9% and Plaza Centres plc (PZC) shed 5.6%.

Four equities were flat and four did not trade. The MSE index reflected the mood on the Exchange, down a minimal 0.2% at 4,885.462.

BOV opened the week minimally higher at Lm1.597, closing the day at Lm3.60 on turnover of 4,540 shares. The price was stable on Tuesday and during Wednesday's apathetic trading, which saw just 913 shares exchanged.

There was no trade on Thursday and on Friday, though comparatively busy with 10 trades for 7,217 shares, the market again saw BOV firmly stuck to the Lm3.60 mark to end the week virtually unchanged, 0.1% ahead.

Total volume for the week amounted to 19,981 shares for a market value of Lm71,915. At the end of the week total bids for 4,815 shares were at Lm3.58, and offers of 617 shares started at Lm3.60.

HSBC Bank Malta plc (HSB) continued to build on the previous week's gains in the early part of the week. The first trade was effected 1c higher at Lm1.97, the price inching forward to Lm1.98 in a comparatively active session where 18,500 shares changed hands.

Tuesday was nearly identical, both in turnover and in price, as HSB again closed at Lm1.98 - as it did on Wednesday. Thursday saw the price give way, first ever so slightly, slipping by just a few mils; in the final half hour several small sell orders pulled the price lower to a Lm1.95 close.

On Friday HSB traded mainly at Lm1.95, rising to Lm1.96 for the last two deals, to end the week flat. HSB placed a ringing first, both in turnover and in value, as 78,063 shares changed hands for a value of Lm153,860 - 54% of the week's total equity turnover by value.

At the end of trading, bids for 1,500 shares were at Lm1.94, and the best offer for 2,000 shares stood at Lm1.96. On Monday HSB announced that the board is scheduled to meet tomorrow week to approve the group's and the bank's interim accounts for the half-year ending June 30, and to consider the declaration of an interim dividend.

Maltacom plc (MLC) was dozy at best with just one matched deal for 270 shares at the unchanged Lm1.41 on Monday. Tuesday's two deals were equally unexciting as MLC closed unchanged.

Another two deals on Wednesday saw the price close a shade lower at Lm1.402 and a slightly more active session on Thursday took MLC down to Lm1.40, which was also the price at which Friday's trades took place.

Turnover for the week totalled 23,360 shares, worth Lm32,725. At the end of trading, the closing price was supported by bids for 1,760 shares at Lm1.40, with a supply of 9,810 shares at Lm1.41.

Trading in Malta International Airport plc (MIA) for the whole week was restricted to five deals: On Monday, it opened weakly up, when two deals were effected, one at Lm1.331 and the other at Lm1.335.

On Tuesday the second and last deal took MIA up to Lm1.345, and on Friday a 100-share deal took the price back to Lm1.33, ending the week unchanged.

A dismal 1,800 shares were traded for the whole week for a value of Lm2,402. At the end of the session, best bids were for 322 shares at Lm1.33 while offers for 300 shares at Lm1.345

International Hotel Investments plc barely made its presence felt, with only 2,467 shares traded at the unchanged price of €1.05 on Thursday.

FIM only traded on Thursday and Friday gaining 1c to $1.95. Turnover for the two days was 16,406 shares for a market value of just under Lm10,000.

Middlesea Insurance plc had a negative start to the week, immediately opening 1c lower at Lm1.72. It continued lower, stopping at Lm1.701, within a whisker of its 2007 low of Lm1.70. The day's turnover totalled 3,674 shares.

It traded again on Wednesday, starting out at Lm1.702 and closing at Lm1.725 on 885 shares. Friday's single deal for 2,000 shares saw the price lose 1c5 to Lm1.71, ending the week 1.2% down.

GCL suffered a bruising blow, tumbling 19c8 or 9% to Lm2.002. Trading however consisted of just one tiny deal for 300 shares on Thursday.

PZC traded on Friday after a month's silence; the price too suffered a knock, losing 3c9, equivalent to 5.6%, on the day's volume of 5,500 shares. On Monday PZC announced that the board is scheduled to meet on August 3 to consider and approve the company's interim financial statements for the six months ended June 30.

Simonds Farsons Cisk plc only traded on Thursday, stable at 97c in two deals for 2,472 shares.

In the Government bond market, turnover by value reached Lm2.35 million with 19 issues traded. In the corporate bond market there were 22 deals for a total turnover value of Lm56,493.

Turnover value in the Treasury Bill market totalled Lm3,945.

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